Pension contribution calculator (Nigeria)
Work out monthly pension contributions under the Pension Reform Act 2014 and see what a Retirement Savings Account could grow to under your own assumptions.
- Free, no sign-up
- Built on current Nigerian rates
- Print or save the result as a PDF
The projection is an illustration using the return and pay-rise rates you enter. Actual RSA returns depend on your PFA and fund and are not guaranteed. The Pension Reform Act 2014 sets minimums of 8% (employee) and 10% (employer) of monthly basic, housing and transport for employers with three or more employees.
How the calculator works
The calculator follows the Pension Reform Act 2014, which sets minimum contributions on an employee’s monthly emoluments: at least 10% from the employer and at least 8% from the employee. Monthly emoluments for pension are never less than basic salary plus housing and transport allowances.
The Act provides for “a minimum of ten per cent (10%) of each employee’s monthly emolument to be contributed by the Employer.”
Pension Reform Act 2014, as summarised by Proshare
- Enter monthly basic salary, housing and transport. Other allowances are left out unless your contract includes them in pensionable pay.
- The employee and employer rates start at 8% and 10%. Raise them if your employer pays more.
- Add any voluntary contribution the employee makes each month.
- Enter the years until retirement, the yearly return you want to assume and the yearly pay rise you expect.
The calculator shows the monthly contribution from each side, the total paid into the Retirement Savings Account (RSA) each month, and a projected balance at retirement.
Contributions on common salaries
These figures assume basic, housing and transport make up 90% of gross pay and the minimum rates of 8% and 10%.
| Monthly gross | Pension base | Employee (8%) | Employer (10%) | Total into the RSA |
|---|---|---|---|---|
| ₦70,000 | ₦63,000 | ₦5,040 | ₦6,300 | ₦11,340 |
| ₦100,000 | ₦90,000 | ₦7,200 | ₦9,000 | ₦16,200 |
| ₦150,000 | ₦135,000 | ₦10,800 | ₦13,500 | ₦24,300 |
| ₦250,000 | ₦225,000 | ₦18,000 | ₦22,500 | ₦40,500 |
| ₦500,000 | ₦450,000 | ₦36,000 | ₦45,000 | ₦81,000 |
| ₦1,000,000 | ₦900,000 | ₦72,000 | ₦90,000 | ₦162,000 |
The employee’s 8% comes out of gross pay before PAYE is worked out, so part of it is offset by lower tax. The PAYE calculator shows the combined effect on take-home pay.
How the projection works
Each month, the calculator adds the contribution to the balance and grows the balance by one twelfth of the yearly return you entered. Once a year it raises the contribution by the pay rise you entered. It does not deduct PFA fees, and it assumes contributions are paid every month without a break.
Starting with ₦81,000 a month, a 10% yearly return and a 5% yearly pay rise, the projected balance grows like this:
Projected RSA balance by years of saving
₦81,000 a month to start, 10% assumed yearly return, 5% assumed yearly pay rise. Illustration only.
Show the numbers
| Item | Value |
|---|---|
| 10 years ₦12.2m paid in | ₦20,056,447 |
| 20 years ₦32.1m paid in | ₦86,963,474 |
| 30 years ₦64.6m paid in | ₦288,629,459 |
Source: Workstat pension calculator, default assumptions.
The longer the money is invested, the larger the share of the balance that comes from growth rather than contributions. After 20 years in this example, ₦32.1 million has been paid in and the rest comes from the assumed return.
Why the assumptions matter
The same contributions over 20 years give very different results depending on the return assumed:
| Assumed yearly return | Projected balance after 20 years |
|---|---|
| 5% | ₦50,797,387 |
| 10% | ₦86,963,474 |
| 15% | ₦160,476,581 |
No return is guaranteed. PFAs publish the actual performance of their funds, so use those figures, not a guess, when you choose an assumption.
Future naira
The projected balance is in naira at the time you retire. Prices also rise over 20 or 30 years, so that balance will buy less than the same amount would today. Treat the projection as a way to compare choices, such as a voluntary contribution, rather than a promise of a retirement income.
Using the calculator as an employer
Employers can use the calculator to cost pension for a new role or a pay review. The employer side of the result is the monthly cost on top of salary. If you choose to pay the whole contribution yourself, the Act requires at least 20% of monthly emoluments, so set the employee rate to 0% and the employer rate to 20% or more.
For a whole team, the free payroll template calculates pension for every employee in the same run as PAYE and NHF. The rules on who must contribute, remittance within 7 days and group life insurance are covered in our guide to pension contribution in Nigeria.
What the calculator does not cover
- PFA fees and actual returns. The projection uses your assumptions only.
- Breaks in contributions. Months without pay, or contributions that were deducted but not remitted, reduce the real balance.
- Withdrawals before retirement. Any amount withdrawn early is not in the projection.
- The retirement option. How the balance is paid out at retirement depends on the option chosen with the PFA.
If your RSA statement shows less than the contributions on your payslips, ask your employer for the remittance schedules and contact your PFA.
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Sources
Frequently asked questions
Short answers to what employers ask us most about this topic.
How do I calculate my pension contribution in Nigeria?
Add your monthly basic salary, housing and transport allowances. Your contribution is at least 8% of that total and your employer's is at least 10%. On ₦450,000 of basic, housing and transport, that is ₦36,000 from you and ₦45,000 from your employer each month.
Is the projected balance what I will receive?
No. It shows what your contributions would grow to if the return and pay rise you enter happened every year. Real returns vary, PFAs charge fees, and the amount you receive at retirement depends on your RSA balance and the retirement option you choose.
Can I contribute more than 8%?
Yes. Enter a voluntary contribution in the calculator. Voluntary contributions are deducted through payroll and paid into your RSA with the mandatory amount.
