While a precise annual number is not readily available, data from the National Pension Commission (PenCom) indicate that approximately 10 million people have pension accounts in Nigeria. This suggests a large number of Nigerians are approaching or in retirement, but the exact number retiring yearly is difficult to pinpoint.
Taking a cue from the United States of America, America is entering a historic surge in retirement history, with more than 4.1 million Americans retiring each year through 2027. What used to be 10,000 over the past decade is now over 11,200 every day, and it is certain the case is the same in Nigeria. Available data (Q2, 2022) from om, Nigeria’s pension industry’s regulator, show about 10 million people have pension accounts as of September 2022.
Due to longer life expectancy, the expected retirement length has increased significantly – in Nigeria, life expectancy at birth (years) has improved by 9.34 years from 54.1 years in 2000 to 63.4 years in 2021, according to the latest test data from the World Health Organisation.
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For many approaching the retirement age, it is not just about retirement—it is about stability and peace of mind in an unpredictable economy.
In recent times in Nigeria, the demand for retiree life annuities is rising as more Nigerians seek financial security in old age amid the economic uncertainty.
With life expectancy increasing and inflation eroding savings, retirees are prioritising investments that guarantee a steady income for life. Unlike other retirement options that may deplete over time, annuities ensure consistent payouts, providing a crucial financial safety net regardless of how long one lives or how the economy fluctuates.
Improved life expectancy has driven a growing preference for retiree life annuities over programmed withdrawals under the Contributory Pension Scheme (CPS), as retirees seek guaranteed income for life rather than the risk of outliving their savings.
According to Section 7(1a) of the Pension Reform Act 2014, an employee on retirement shall procure an Annuity for Life Policy or a Programmed Withdrawal.
The lump sum for the procurement of an annuity for a life policy or programmed withdrawal must have been accumulated through a series of employer/employee contributions into the retirement savings account (RSA) of the retiring employee throughout his/her working career.
Data from the PenCom show that between 2020 and the third quarter of 2024, 185,270 retirees choose life annuities, while only 131 retirees opted for programmed withdrawals. The Commission said life insurance companies offering annuities have so far since the inception of the CPS received N689 billion as a premium from retirees.
PenCom said,, ‘There is a significant show of confidence in financial security during retirement as Nigerian retirees have collectively invested a staggering N689 billion in annuity premiums.
In a generation that prioritises self over anything we make a case for life annuities over any other retirement options. Why? Often, the present generation is self-centred and selfish, and retired parents depending on them may lead to quick death. But with the right retirement policy, total dependence on children, who often may not be there when you need them most, is reduced to the nearest minimum.
“Unlike other retirement options that may deplete over time, annuities ensure consistent payouts, providing a crucial financial safety net regardless of how long one lives or how the economy fluctuates.”
The bold move underscores a growing trend among retirees to secure a stable income stream as they transition from their professional lives, says Okolomba Louis, an insurance broker.
With life expectancy on the rise and the cost of living continuing to increase, retirees are increasingly looking to insurance companies to safeguard their financial futures.
This payment of premium for annuity not only reflects the desire for a comfortable retirement but also highlights the important role of the insurance sector in providing financial solutions that cater to the specific needs of retirees, according to Louis.
With life expectancy increasing and the cost of living rising, more and more people are investigating how to ensure they have a guaranteed income for life. Chika Onwunali, partner at Premium Debate, notes.
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One of the factors driving the uptake of annuities is the introduction of regulations that make annuities more attractive to consumers.
Akin Iguoba, president, Retired Customs Officers Association of Nigeria, and Imelda Anyanwu, another annuity customer, state we have been on an annuity plan for years since retirement, and our experience has been exceptional.
The United Nations Population Division (UNPD) also reports that Nigeria has witnessed a modest growth in life expectancy over the past two decades.
In 2000, the total life expectancy stood at 47 years, with women, at, at 48 years,, slightly outliving men, at, at 46 years. The total life expectancy rose to 55 years in 2024, with women constantly maintaining a higher life expectancy than men, reaching 55 years, compared to 54 years for men, UNPD said.
We think with this preference, laced up with the right policy from the government, the willingness of employers to remit the agreed sum promptly, and the increased enrolment by would-be retirees, life annuities are a win-win for both retirees and their families.
