Mandatory 8% employee and 10% employer RSA contributions.
Total monthly contribution
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Employee (8%) monthly
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Employer (10%) monthly
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Employee annual
—
Total annual
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Worked example
Take a monthly emolument of N400,000, meaning basic salary plus housing and transport allowances. The employee contributes 8%, which is N32,000 a month, and the employer adds 10%, which is N40,000 a month. Together that is 18% of emolument, or N72,000 every month, paid into the employee's Retirement Savings Account. Over a full year the employee puts in N384,000 and the combined contribution reaches N864,000. Note that the rates apply to emolument, not total gross pay, so allowances outside basic, housing, and transport do not raise the contribution.
Contributor
Monthly (NGN)
Annual (NGN)
Employee (8%)
32,000
384,000
Employer (10%)
40,000
480,000
Combined (18%)
72,000
864,000
How it is calculated
The Pension Reform Act 2014, retained under the 2026 regime, sets a minimum total contribution of 18% of monthly emolument. The split is 8% deducted from the employee and 10% paid by the employer, though an employer may choose to bear the whole contribution at a minimum of 20%. Emolument is defined as basic salary plus housing and transport allowances, so it is usually less than total gross pay. The contributions flow into the employee's Retirement Savings Account with a licensed Pension Fund Administrator, where they are invested until retirement. Enrolment is mandatory for employers with 15 or more employees, and the employee share is a deductible relief that lowers the PAYE base.
Frequently asked questions
How much pension is deducted from my salary in Nigeria?
The minimum is 18% of your monthly emolument, split as 8% from you and 10% from your employer. Emolument here means basic salary plus housing and transport allowances, not your total gross pay. The contributions go into your Retirement Savings Account with a Pension Fund Administrator. Enrolment is mandatory for employers with 15 or more staff.
What counts as emolument for pension purposes?
Emolument under the Pension Reform Act is basic salary plus housing and transport allowances. Other elements of your pay package, such as performance bonuses, meal allowances, or utility allowances, are typically excluded from the pension base. This means the contribution is usually lower than 18 percent of total gross pay. Always check your payslip to confirm which allowances your employer includes.
Can my employer pay more than 10 percent?
Yes. An employer may choose to bear the full minimum contribution of at least 20 percent of emolument without deducting anything from the employee. Where an employer contributes at least 20 percent on the employee's behalf, the employee's own 8 percent deduction is not required. Some employers go higher voluntarily as part of a benefits package. The employee share is also a deductible relief that reduces the PAYE base when deducted.
What is a Retirement Savings Account and how does it grow?
A Retirement Savings Account is a personal pension pot held with a licensed Pension Fund Administrator of your choice. Monthly contributions from both you and your employer are credited to it and invested by the PFA in a portfolio of bonds, equities, and money-market instruments. The fund grows tax-deferred until withdrawal at retirement. You can switch PFAs once a year if you are dissatisfied with returns or service.