The National Pension Commission (PenCom) is working 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).

Omolola Oloworaran, Director General of PenCom, stated this during a courtesy visit to Didi Esther Walson-Jack, Head of the Civil Service of the Federation (HCSF) in Abuja to discuss ongoing pension reforms and initiatives aimed at improving the welfare of federal civil servants.

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

She said the proposed scheme would provide for a one-time lump-sum payment at retirement, in addition to existing pension entitlements under the CPS.

According to the PenCom DG, the proposed gratuity payment, if set at 100% of a retiree’s last gross annual remuneration, would cost the federal government an estimated ₦30 billion annually. This amount, she emphasized, was a modest but impactful investment in honouring the service and dedication of retiring civil servants.

“PenCom is working on modalities for the establishment of a Gratuity Scheme, in line with Section 4(4)(a) of the PRA 2014 for retiring employees of Federal Government treasury-funded MDAs.

“PenCom DG said this has been estimated to cost the federal government only about N30 billion per annum as determined by PenCom and confirmed by the 2024 Stakeholders Committee on outstanding pension liabilities, if retiring federal employees are paid 100% of their last gross annual remuneration,”

Oloworaran also raised concerns over the persistent delay in pension payments caused by the slow release of accrued pension rights. 

She highlighted the success of previous collaborations between PenCom and the OHCSF, which resulted in Federal Executive Council (FEC) approval of a ₦758 billion bond to clear outstanding pension liabilities.

To build on this progress, she noted that PenCom is set to launch a comprehensive online enrolment exercise in August 2025 for all federal employees of treasury-funded MDAs who were in service before June 2004.

 The exercise, according to her, will determine the government’s total liability on accrued pension rights, with the aim of presenting the data for a one-off bond issuance to clear the backlog.

She further explained that once determined, the accrued pension rights would be credited directly into the individual Retirement Savings Accounts (RSAs) of eligible civil servants, allowing them to earn investment returns while shielding the funds from political interference.

Oloworaran also disclosed that PenCom is developing a digital platform to streamline the enrolment process and is seeking OHCSF’s assistance in directing MDAs to participate fully and provide necessary documentation.

On challenges affecting pension contributions, Oloworaran noted that some MDAs not enrolled in the Integrated Payroll and Personnel Information System (IPPIS) remit funds without contribution schedules.

To address this, she said that PenCom has introduced a new Pension Contribution Remittance System that mandates the use of selected Payment Solution Support Providers (PSSPs) to ensure accuracy and prompt remittance of pension contributions into employees’ RSAs.

She urged the OHCSF to issue directives to the IPPIS office in the Office of the Accountant General of the Federation (OAGF), as well as MDAs not on IPPIS such as tertiary institutions and self-funding agencies to comply with the new remittance process, effective June 2025.

In response, Walson-Jack expressed full support for all PenCom’s initiatives and commended the commission’s proactive efforts in enhancing pension administration. She assured that the OHCSF would issue the necessary circulars to ensure compliance and pledged close collaboration in securing approvals for the proposed gratuity scheme.

She acknowledged long-standing calls from civil servants for the reintroduction of gratuity and welcomed the initiative as a step in the right direction.

To drive the reform efforts, PenCom and OHCSF agreed to establish a standing committee to work out implementation modalities and address emerging issues as they arise.