CrusaderSterling Pensions

Benefits and Importance of the Contributory Pension Scheme.

The Contributory Pension Scheme (CPS) is a pension plan in Nigeria where both employees and employers contribute a portion of the employee’s salary into a Retirement Savings Account (RSA). Employee contributes 8% of their monthly salary, while the employer contributes 10%. Benefits and importance of the Contributory Pension Scheme include:

  • Financial Security in Retirement: One of the primary benefits of the Contributory Pension Scheme is that it provides individuals with a source of income during their retirement years. By contributing to the scheme throughout their working lives, individuals can build up a pension fund that will support them financially once they retire. This financial security is crucial for maintaining a decent standard of living in old age and reducing the risk of poverty among retirees.
  • Personal Savings and Retirement Planning: It promotes a culture of long-term financial planning, helping individuals to set aside money for their retirement years and reduce reliance on friends and family.
  • Portability and Flexibility: The Contributory Pension Scheme typically offers portability, allowing individuals to transfer there pension benefits to another Pensions Fund Administrator. This flexibility enables individuals to continue building their pension fund regardless of changes in their Pension Fund Administrator.
  • Reduction of Dependency on Government-Sponsored Pension Systems: By encouraging individuals to save for their retirement, the Contributory Pension Scheme helps to reduce the strain on government budgets and resources thereby promoting self-reliance and independence in retirement.
  • Economic Stability and Development: A well-functioning pension system contributes to economic stability and development by mobilising long-term savings for investment. Pension funds are invested in various sectors of the economy, providing capital for infrastructure projects, business expansion, and job creation.
  • Social Cohesion and Welfare Improvement: Access to a reliable pension system fosters social cohesion by ensuring that individuals can retire with dignity and security. It promotes intergenerational equity by enabling older adults to maintain their standard of living without placing undue financial burdens on younger generations.
  • Risk Management and Insurance: The scheme serves as a form of insurance against the risk of outliving one’s savings or experiencing financial hardship in old age. It offers a predictable and stable source of income during retirement, mitigating the risk of poverty or financial distress among older adults.


In summary, the Contributory Pension Scheme plays a crucial role in promoting financial security, retirement planning, and economic development. By encouraging individuals to save for their own retirement and facilitating long-term investment, the scheme contributes to the well-being of retirees, the stability of the economy, and the overall welfare of society.

Contact us for advice and support if you have any further questions or concerns regarding pensions. You can reach us via email at or by giving us a call at 0201 2714605, 0201 2713800-4.


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