FG to Introduce N30bn Annual Gratuity Scheme for Retiring Civil Servants
By Patience Ikpeme
The Federal Government is preparing to introduce a Gratuity Framework for civil servants in treasury-funded Ministries, Departments, and Agencies (MDAs) under the Contributory Pension Scheme (CPS).
This initiative, which is being developed by the National Pension Commission (PenCom), is projected to cost approximately N30 billion annually.
The planned intervention, according to PenCom, aims to provide retiring federal employees with a one-time gratuity equivalent to 100 percent of their last gross annual remuneration. This figure was determined by PenCom and confirmed by the 2024 Stakeholders Committee on outstanding pension liabilities.
The development followed a high-level meeting held on June 13, 2025, in Abuja, where the Director General of PenCom, Ms. Omolola Oloworaran, paid a courtesy visit to the Head of the Civil Service of the Federation (HCSF), Mrs. Didi Esther Walson-Jack.
During the meeting, Ms. Oloworaran explained that the proposed Gratuity Framework is being worked out in line with Section 4(4)(a) of the Pension Reform Act (PRA) 2014, which permits payment of gratuity in addition to pension benefits. She described the plan as a modest but meaningful move to enhance the welfare of public servants exiting service after years of dedicated work.
She also drew attention to the persistent issue of delayed pension payments, largely due to the late release of accrued pension rights. According to her, previous collaboration between PenCom and the Office of the Head of Service has already delivered progress, including securing Federal Executive Council (FEC) approval for the issuance of a N758 billion bond to settle outstanding pension liabilities.
To ensure comprehensive tracking of liabilities, Ms. Oloworaran announced a one-time, digital enrolment exercise for all federal civil servants in treasury-funded MDAs who joined service before June 2004. The online verification, which begins in August 2025, is designed to determine each worker’s accrued rights. The Commission intends to present the total figure to the Federal Government for the potential issuance of a bond to settle the entire backlog.
She noted that, once determined, the accrued rights would be credited directly into individual Retirement Savings Accounts (RSAs), allowing retirees to begin earning returns immediately. “This will insulate pension assets from political interference, as control rests entirely with the Pension Fund Administrators,” Ms. Oloworaran stated.
PenCom is also developing a digital platform to streamline the enrolment exercise, and plans to roll out the application in August. The Commission is seeking the Head of Service’s support in directing all MDAs to participate fully and submit required documentation.
Ms. Oloworaran also addressed concerns regarding uncredited pension contributions among MDAs not enrolled on the Integrated Payroll and Personnel Information System (IPPIS). She explained that contributions are often made without corresponding schedules, making it difficult to trace or credit employees’ RSAs accurately.
To resolve this issue, she said PenCom has launched a new Pension Contribution Remittance System. Under this system, all employers will be required to use designated Payment Solution Support Providers (PSSPs) to remit pension contributions starting from June 2025. This change aims to ensure prompt and accurate allocation of pension payments into each employee’s RSA.
She called on the Head of Service to support this policy by directing the IPPIS office at the Office of the Accountant General of the Federation, as well as MDAs not on IPPIS – including tertiary institutions and self-funded agencies – to comply with the new system without delay.
In her response, Mrs. Walson-Jack praised PenCom’s efforts, pledging full cooperation and institutional support. She said, “Civil servants have long demanded the restoration of gratuity. I am pleased to back this initiative and will ensure the necessary circulars are issued to MDAs.”
She further welcomed the proposed enrolment exercise and digital reforms, describing them as necessary steps toward improving service delivery and employee confidence in the pension process.
To formalize the partnership and ensure continuity, PenCom and the Office of the Head of Civil Service agreed to establish a Standing Committee. The committee will oversee the implementation of the proposed reforms, address emerging challenges, and track progress on pension-related initiatives.
