PenCom advises small business owners on pension and retirement plans

The National Pension Commission (PenCom) has told small business owners to pay their workers' pension contributions as required by law. They should also focus on planning for retirement instead of relying only on their businesses for income when they get older.

Samuel Uwandu, PenCom’s commissioner for inspectorate, shared this advice on Tuesday during a meeting with small and medium-sized enterprises (SMEs) and informal sector workers in Lagos. This was part of the ongoing 2026 National Pension Week.

The 2026 National Pension Week runs from 26 to 30 October. It aims to encourage more participation in Nigeria’s pension system.

At the event, Mr Uwandu said that paying pension contributions on time is both a legal requirement and a duty employers have towards their workers, who help make their businesses successful.

“Pension contributions deducted from employees’ salaries must be treated with the seriousness they deserve and remitted in accordance with the laws of the Federal Government of Nigeria,” he said.

He warned that late payments or not paying pension contributions could harm workers’ retirement security. It could also damage public trust in the pension system.

“Compliance with pension obligations is not merely a regulatory requirement; it is an expectation and responsibility of business leadership, and respect for the people who help make the business succeed,” he said.

Mr Uwandu reminded employers that their employees' skills and commitment are key to business growth. He encouraged them to recognize this by fulfilling their legal obligations, paying salaries on time, and providing safe working conditions.

“Employees are not simply a cost of doing business. They are partners in building the enterprise,” he said.

Mr Uwandu also advised business owners to financially prepare for retirement. He said many entrepreneurs spend their best years building their businesses, reinvesting profits, and supporting their families, but they often neglect their own retirement planning.

According to him, business owners need to think about how they will support themselves when age, health issues, or other problems make it hard to keep working.

“As your business grows, you should also begin to prepare for your financial future and retirement,” he said.

He suggested that entrepreneurs should develop a savings habit, set aside retirement funds apart from their business capital, and look for suitable long-term savings options.

Mr Uwandu mentioned the Personal Pension Plan (PPP) under Nigeria’s contributory pension system as a good option for self-employed Nigerians and those in the informal sector.

He urged business owners to seek advice from licensed pension fund administrators and PenCom about the best options for them.

“The central message here is simple: retirement planning should not begin only when a person is approaching retirement age.

“It should be gained when there is still time to save money, contribute, benefit from long-term accumulation, and build financial resilience,” he said.

He added that entrepreneurs should aim to retire with dignity instead of being fully reliant on their businesses or financial help from their families.

Beyond paying pensions, Mr Uwandu encouraged small business owners to improve their financial management practices to make their businesses more sustainable.

He advised them to keep accurate financial records, separate personal and business finances, manage their income and expenses wisely, and reinvest a fair part of their profits back into their businesses.

He explained that reinvesting can help business owners buy better equipment, upgrade technology, expand their stock, train their staff, and reach new customers through advertising.

“Where profits are consumed entirely by immediate personal needs, the business may struggle to expand or withstand unexpected challenges,” he said.

However, he stressed the need for a balance between reinvestment and personal financial needs. Sustainable businesses should support both growth and the long-term security of their owners.

Mr Uwandu also urged the government to create a better environment for businesses, noting that SMEs help create jobs, develop skills, and boost local production in communities.

He encouraged participants to use the meeting to share experiences, find practical solutions, and commit to actions that would improve the future of Nigerian businesses and the welfare of their workers.