There is, and it’s called a Voluntary Contribution (VC).

This isn’t just about saving a little extra. Making VCs is one of the most powerful and tax-efficient tools available for anyone looking to seriously learn how to increase my pension savings. In this guide, we’ll go beyond the basics to show you exactly how voluntary contributions in Nigeria work and the incredible impact they can have on your future.

What Exactly Are Voluntary Contributions?

A Voluntary Contribution is any amount you decide to add to your RSA, over and above the mandatory 8% you, and 10% your employer contribute. Think of it as putting your retirement savings on a fast track. It is a flexible way for you to build a bigger financial cushion for your future, on your own terms.

The 5 Ways VCs Supercharge Your Retirement Savings

1. The Power of Accelerated Compounding

The magic of pensions lies in compound interest—earning returns not just on your initial capital, but on the accumulated returns as well. When you make VCs, you are pouring fuel on this fire. A larger contribution base means your money starts working harder for you, faster.

2. Incredible Tax Advantages (This is a Game-Changer)

This is perhaps the most significant, yet least understood, benefit. One of the major tax benefits of pension contributions is that VCs are tax-deductible at source.

Here’s how it works with a clear example:

Let’s say your monthly salary is ₦300,000 and you decide to make a VC of ₦30,000 per month.

• Without VC: Your income tax (PAYE) is calculated based on your full taxable income.
• With VC: Your taxable income is first reduced by your VC amount. So, your tax will be calculated on (₦300,000 – ₦30,000) = ₦270,000.

This means you pay less tax every single month, which directly increases your take-home pay or further boosts your savings. It’s a direct financial incentive from the government to encourage you to save for your future. For high-income earners facing higher taxes under Nigeria’s new tax regime starting January 2026, this is a smart way to reduce tax burdens.

3. Building a Supplemental Retirement Fund

Life is unpredictable. Your mandatory contributions are fantastic, but they are designed to provide a baseline for retirement. VCs allow you to build an additional layer of financial security. This extra pot of money can be the difference between a comfortable retirement and a truly exceptional one, funding travel, hobbies, or entrepreneurial ventures.

4. Flexible Access for Life’s Big Projects

Under PenCom regulations, you can withdraw a portion of your VCs before retirement. While the primary goal is long-term savings, you can withdraw up to 50% of your total VCs to fund major life projects like acquiring your first home through a residential mortgage. This adds a layer of flexibility that makes VCs a versatile financial planning tool.

5. The Psychological Win of Taking Control

Actively deciding to make VCs shifts your mindset from being a passive saver to an active architect of your financial future. This sense of control is empowering and often leads to better financial habits across the board.

The Long-Term Impact: A Mini-Calculator

Let’s see what a small, consistent VC can do.