Pension revolution for the ‘Japa Generation’
In recent years, Nigeria has witnessed a powerful wave of “Japa” – skilled workers, young professionals and entrepreneurs leaving in search of greener pastures abroad. At the same time, the rise of hybrid and remote work means many Nigerians remain globally connected, working for foreign firms, earning in dollars, or living partly abroad while attached to Nigerian employers. These diasporans represent a huge potential for foreign investment back into the country that remains largely untapped.
Thankfully, the National Pension Commission (PenCom) recently issued a landmark guideline on foreign currency contributions under the Contributory Pension Scheme (CPS), allowing Nigerians abroad and foreign professionals in Nigeria to contribute in U.S. dollars. This is a major step – not only aligning Nigeria’s pension system with global realities but also offering a new vehicle for preserving value and boosting the naira by attracting fresh dollar inflows.
Under the new regulation, eligible participants – Nigerians living or working abroad and expatriates in Nigeria paid in foreign currency – may remit their pension contributions only in U.S. dollars, channelled into dedicated foreign‑currency Retirement Savings Accounts (RSAs). For diaspora Nigerians, the remittance path runs through Non‑Resident Nigerian Ordinary Accounts (NRNOAs), while those in Nigeria earning in foreign currency must use domiciliary accounts linked with their Pension Fund Administrator’s (PFA) custodian bank. PFAs will invest such contributions in a distinct “Dollar Fund”, focusing on dollar‑denominated assets such as Eurobonds, supranational bonds, and U.S.‑backed instruments. Contributors may withdraw benefits in dollars or optionally convert to Naira at prevailing rates at retirement or earlier, subject to the withdrawal rules provided. The rationale is to stabilise pension value for globally mobile workers, hedge currency risk, and open the Nigerian pension system to wider global labour pools.
One of the most compelling benefits of this reform is its potential positive effect on the naira. Remitted dollars into these RSAs mean fresh foreign currency flows into the Nigerian banking and pension ecosystem. As more Nigerians abroad choose to channel part of their income home via pension contributions, the cumulative effect may ease foreign‑exchange scarcity, reduce pressure on the Naira, and promote outward investment in local productive assets. In other words, while the CPS traditionally operated in Naira and was exposed to devaluation risk, the new dollar‑denomination offers a natural hedge. For contributors, this means greater value preservation; for Nigeria, it means stronger external‑currency inflows and enhanced credibility of the pension industry.
The reform solves a long‑standing gap. For many years, Nigerians earning abroad were effectively excluded from automatic participation in the CPS because contributions in Naira meant currency loss, conversion hassle and remittance drag. Meanwhile, foreign professionals in Nigeria had to navigate multiple pension options. By opening a clear pathway for dollar‑based contributions, PenCom makes the CPS truly inclusive. The broader workforce – diaspora Nigerians and international talent – now have a simple, regulated vehicle to secure retirement savings in a globally transferable currency. This helps expand coverage, deepen capital markets and give Nigeria a competitive pension proposition.
Read also: PenCom expands pension scheme to Diaspora Nigerians, foreigners
However, despite its good intentions, it all comes down to implementation – the existing local scheme is still struggling to gain acceptance, and its full potential continues to be undermined by misinformation and under-education. The PFAs, PFCs and PenCom will have to ramp up their education and advocacy locally because the people abroad will be heavily dependent on the opinions of their family and friends in Nigeria in making these decisions. In addition, the operators need to find creative ways to capture the hearts and pockets of the diaspora market that is out there.
To all Nigerians abroad, the message is clear: this is your moment. Tap into your earning power, secure your retirement in a currency aligned with your global income, and remain connected to your homeland’s pension system. Register with a licensed PFA or continue with the one you had before you left, open your foreign‑currency RSA, and start contributing in U.S. dollars today. For foreign professionals working in Nigeria, engage with your preferred PFA and participate with confidence – you get access to a regulated pension regime denominated in a globally accepted currency. In both cases, you’re not just saving for retirement; you’re participating in a reform that strengthens the entire Nigerian pension landscape.
For Nigeria as a whole, this reform is a signal that the pension industry is evolving to match the modern world of remote work, global mobility and integrated savings. By embracing dollar contributions, PenCom is sending a message: Nigeria’s CPS is no longer just a domestic scheme – it is open, globally competitive and investor‑friendly. If stakeholders collaborate thoughtfully – PFAs educating participants, banks facilitating smooth remittances, and regulators ensuring transparency – the reform has the potential to become one of the most transformative in the industry’s two‑decade history.
In short, whether you are in Lagos or London, Abuja or Atlanta, you now have a pension option that speaks your currency. Let’s make it count—for your future and for Nigeria’s financial resilience.
Omagbitse Barrow is a pensions and financial literacy advocate and Chief Executive of the Abuja-based strategy consulting firm, Learning Impact (www.learningimpactmodel.com).
