Pension Tax Relief Calculator

See how much income tax you save by making voluntary RSA contributions. Every naira added to your pension reduces your PITA bill.

Monthly Gross Income

₦

50,0005,000,000

Monthly Voluntary RSA Contribution

₦

0500,000

Mandatory RSA contribution (8% employee) = ₦40,000/month — already included in your tax calculation as a base deduction.

Before vs After Voluntary Contribution

Without voluntary

Pension deducted₦480,000

Annual PITA₦780,800

With voluntary

Pension deducted₦1,080,000

Annual PITA₦636,800

Annual Tax Saving

₦144,000

₦12,000/month

Tax Relief Rate

24.0%

of voluntary contribution

Effective cost: You contribute ₦600,000/year to your RSA but save ₦144,000 in tax. Net out-of-pocket cost: ₦456,000/year (₦38,000/month).

Disclaimer

This calculator is for educational and illustrative purposes only. It does not constitute financial, investment, or tax advice. Results are estimates based on the inputs you provide and may not reflect actual returns. Consult a qualified financial advisor before making any investment decisions.

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How the Tax Relief Works

Tax saving = PITA(Gross − CRA − Mandatory) − PITA(Gross − CRA − Mandatory − Voluntary)

Where:

GrossAnnual gross employment income

CRAConsolidated Relief Allowance (20% of gross + max(1%, ₦200k))

Mandatory8% mandatory employee RSA contribution (minimum)

VoluntaryAdditional voluntary contribution to your RSA

Disclaimer: Tax savings shown are estimates based on PITA progressive bands. Individual circumstances, state levies, and employer PAYE processes may differ. Consult a qualified tax consultant before making large voluntary contributions.

Frequently Asked Questions

Yes. Under Section 4 of the Pension Reform Act 2014 (as amended) and confirmed under PITA, both mandatory and voluntary contributions to your Retirement Savings Account (RSA) are deductible from gross income before PITA is assessed. This means every naira you put into your RSA reduces your taxable income by the same amount.

There is no explicit statutory cap on voluntary RSA contributions for tax purposes under the Pension Reform Act 2014. However, PENCOM guidelines and practice typically recognise contributions up to 1/3 of total gross income as reasonable. Very large voluntary contributions may attract scrutiny from FIRS. Consult a tax adviser for significant voluntary contributions.

Voluntary contributions made before retirement can be withdrawn after two years from the date of each contribution, subject to payment of tax on any income earned (returns). This makes them more flexible than mandatory contributions, which can only be accessed at retirement (or earlier under specific hardship provisions).

Employer contributions to the RSA (minimum 10% of emoluments) are also fully deductible as a business expense for Companies Income Tax (CIT) purposes. This means the total cost of the pension scheme to the employer is reduced by their CIT rate (currently 30% for large companies). Both sides of the employment relationship benefit from the pension tax framework.

If you pay 24% income tax marginally, contributing an extra ₦100,000 voluntarily to your RSA reduces your PITA by ₦24,000. So the net out-of-pocket cost is only ₦76,000 to put ₦100,000 in your pension. At lower marginal rates, the saving is less, but the pension still grows tax-deferred — a double benefit.