LCCI urges FG to suspend proposed pension contribution increase
Lagos Chamber of Commerce & Industry LCCI
Nike Popoola
The Lagos Chamber of Commerce and Industry (LCCI) has called on the Federal Government and the National Pension Commission (PenCom) to suspend the proposed three-percentage-point increase in mandatory pension contributions, warning that the policy could weaken businesses and slow job creation.
In a statement signed by its Director General, Dr. Chinyere Almona, on Friday, the Chamber said that while strengthening retirement security was a legitimate objective, increasing payroll costs at a time of economic challenges would place additional pressure on employers.
According to the LCCI, businesses are currently grappling with high financing costs, persistent inflation, exchange rate pressures, rising energy prices, and multiple taxes, which it said remain unresolved under the Nigeria Tax Act 2025.
The Chamber noted that Nigeria’s current mandatory pension contribution rate of 18 per cent—comprising 10 per cent from employers and eight per cent from employees—is already broadly aligned with the Organisation for Economic Co-operation and Development (OECD) average of 18.8 per cent.
It stated that increasing the contribution rate to approximately 21 per cent would place Nigeria above several comparator economies, including the United Kingdom, the United States, Kenya, and South Africa.
LCCI warned that the proposed increase would raise the cost of employment, discourage recruitment and wage growth, disproportionately affect micro, small and medium enterprises (MSMEs), and reduce Nigeria’s attractiveness as an investment destination.
“The proposed increase will raise the cost of employment, discourage recruitment and wage growth, disproportionately burden MSMEs, reduce Nigeria’s competitiveness for investment, and increase the risk of non-compliance and business informality,” the statement read.
The Chamber maintained that a stronger pension system should not come at the expense of business sustainability and urged the government to defer the proposal until a Nigeria-specific actuarial and economic impact assessment is conducted.
It also called for extensive consultations with organised private sector groups and labour unions before any decision is taken.
In addition, LCCI urged PenCom to explore innovative investment instruments capable of delivering higher returns to pension contributors, describing this as an alternative means of improving retirement outcomes without increasing mandatory contributions.
