The Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government and the National Pension Commission (PenCom) to suspend the proposed three-percentage-point increase in mandatory pension contributions, warning that the move could significantly increase the cost of employment and slow economic growth.
The chamber said that while strengthening Nigeria’s pension system and improving retirement security remain important, raising compulsory pension contributions at a time when businesses are grappling with multiple economic challenges would place additional pressure on employers.
Speaking on the proposal, the Director-General of LCCI, Dr Chinyere Almona, said businesses are already contending with high financing costs, persistent inflation, exchange rate volatility, rising energy prices and multiple taxes, many of which remain unresolved despite the Nigeria Tax Act 2025.
According to her, increasing payroll obligations under the current economic conditions could weaken business sustainability, discourage investment and reduce the capacity of firms to create new jobs.
Nigeria’s Pension Contribution Already Competitive
Almona noted that Nigeria’s current mandatory pension contribution of 18 per cent, comprising 10 per cent from employers and 8 per cent from employees, is already broadly in line with the Organisation for Economic Co-operation and Development (OECD) average of 18.8 per cent.
She argued that increasing the contribution rate to approximately 21 per cent would place Nigeria above several comparable economies.
According to her, the United Kingdom operates an 8 per cent mandatory contribution system, while the United States maintains a 12.4 per cent rate. She added that Kenya requires a 12 per cent contribution, subject to earnings caps, while South Africa has no equivalent mandatory private-sector pension contribution.
Higher Payroll Costs Could Hurt Businesses
The LCCI warned that implementing the proposed increase could raise labour costs, discourage recruitment, limit wage growth and place additional financial burdens on Micro, Small and Medium Enterprises (MSMEs).
The chamber also expressed concern that higher employment costs could reduce Nigeria’s attractiveness to investors while increasing the risk of non-compliance with pension regulations and encouraging more businesses to operate in the informal sector.
According to Almona, sustainable pension reforms should strike a balance between protecting workers’ retirement savings and ensuring businesses remain viable.
“A stronger pension system cannot be built on weaker businesses,” she said.
The LCCI therefore called on the Federal Government and PenCom to reconsider the proposed increase and engage stakeholders in developing reforms that strengthen pension security without undermining business growth, employment and economic competitiveness.
