PenCom, OHCSF propose ₦30bn annual gratuity for retiring civil servants

The National Pension Commission (PenCom) is partnering with the Office of the Head of the Civil Service of the Federation (OHCSF) to introduce a ₦30 billion annual gratuity scheme for retiring civil servants under the Contributory Pension Scheme (CPS).

Director General of PenCom, Omolola Oloworaran, announced the plan during a courtesy visit to the Head of the Civil Service of the Federation, Didi Esther Walson-Jack, in Abuja. The visit focused on pension reforms and new initiatives to improve the welfare of federal civil servants.

Oloworaran revealed that PenCom is finalising arrangements for the rollout of a Gratuity Framework for employees in treasury-funded Ministries, Departments and Agencies (MDAs), in line with Section 4(4)(a) of the Pension Reform Act (PRA) 2014.

She explained that the proposed framework would provide a one-time lump-sum payment to retirees, in addition to their entitlements under the CPS.

According to the PenCom boss, the gratuity payout, if fixed at 100 percent of a retiree’s last gross annual salary, would cost the federal government an estimated ₦30 billion annually. She described the initiative as a modest but meaningful step to recognise the years of service and contribution of public sector retirees.

“PenCom is putting together the modalities for the establishment of a Gratuity Scheme for retiring employees of treasury-funded MDAs, as stipulated in Section 4(4)(a) of the PRA 2014,” Oloworaran said.

“This figure has been determined by PenCom and validated by the 2024 Stakeholders Committee on outstanding pension liabilities, should retirees receive 100 percent of their last gross annual earnings as a gratuity.”

She also voiced concerns over the repeated delays in pension payments, largely due to the late release of accrued pension rights. Despite this, she acknowledged progress made through previous collaborations between PenCom and the OHCSF, which secured a ₦758 billion bond from the Federal Executive Council (FEC) to settle outstanding liabilities.

Building on that momentum, she disclosed that PenCom would commence a digital enrolment exercise in August 2025 for federal employees of treasury-funded MDAs who began service before June 2004. The exercise is intended to determine the total accrued pension liability, with a view to securing a single bond issuance to clear the backlog.

She said the accrued benefits would be credited directly into the Retirement Savings Accounts (RSAs) of eligible civil servants, allowing them to earn investment returns and safeguarding the funds from political interference.

To streamline the process, PenCom is developing a digital platform for enrolment and has requested the support of the OHCSF in directing MDAs to cooperate fully and supply the required documentation.

On challenges with pension remittances, Oloworaran pointed out that some MDAs not enrolled on the Integrated Payroll and Personnel Information System (IPPIS) remit pension contributions without accompanying schedules.

To resolve this, she said PenCom had launched a new Pension Contribution Remittance System requiring the use of selected Payment Solution Support Providers (PSSPs). This is intended to ensure timely and accurate payments into employees’ RSAs.

She appealed to the OHCSF to instruct the IPPIS office within the Office of the Accountant General of the Federation (OAGF), along with MDAs not on IPPIS such as tertiary institutions and self-funding agencies, to adhere to the updated remittance procedures from June 2025.

In response, Walson-Jack expressed full backing for PenCom’s reform agenda and praised the Commission’s proactive steps to improve pension management. She pledged that the OHCSF would issue all necessary circulars to ensure compliance and confirmed her office’s commitment to securing approvals for the proposed gratuity scheme.

Walson-Jack also acknowledged that civil servants have long advocated for the return of gratuity payments and described the initiative as a welcome development.

To advance the reform process, both PenCom and the OHCSF agreed to set up a standing committee that would oversee implementation and address emerging challenges.