Nigeria’s Civil Servants Set For Gratuity Revival With ₦30 Billion Annual Plan.
The National Pension Commission (PenCom) is spearheading a transformative initiative to reintroduce gratuity payments for civil servants under the Contributory Pension Scheme (CPS), with an estimated annual cost of ₦30 billion. The move, aimed at enhancing retirees’ welfare, requires robust legal backing to ensure its sustainability, according to pension experts.
The proposed gratuity scheme, developed in collaboration with the Office of the Head of the Civil Service of the Federation (OHCSF), will benefit civil servants in treasury-funded Ministries, Departments, and Agencies (MDAs). PenCom’s Director General, Omolola Oloworaran, announced the plan during a meeting with the Head of the Civil Service, Didi Walson-Jack, on 13 June 2025. The initiative aligns with Section 4(4)(a) of the Pension Reform Act 2014, which supports frameworks to improve retirement benefits.
Gratuity, a one-time lump sum payment made by employers to employees upon retirement after a minimum service period, was discontinued for many public servants with the introduction of the CPS under the Pension Reform Act 2004. Dr Pius Apere, Chairman of Achor Actuarial Services Limited, praised PenCom’s efforts but stressed the need for legal amendments to the 2014 Act to avoid duplication of benefits and ensure compliance. “This decision must be backed by law to guarantee its success,” Apere said, noting potential funding challenges for federal and state governments.
The initiative has sparked optimism among civil servants, who have long demanded the restoration of gratuity payments. Oloworaran highlighted that the scheme would credit accrued pension rights into Retirement Savings Accounts (RSAs), allowing retirees to earn returns immediately. A digital application to streamline enrolment is also in development, with a planned rollout in August 2025. To address uncredited pension contributions, PenCom has introduced a new Pension Contribution Remittance System, particularly for MDAs not enrolled on the Integrated Payroll and Personnel Information System (IPPIS).
Didi Walson-Jack reaffirmed her support, noting that the demand for gratuity has been a longstanding issue. A Standing Committee, comprising PenCom and OHCSF, will oversee the scheme’s implementation and address emerging challenges. Apere suggested that state governments might follow suit with similar schemes, though funding remains a concern. He proposed a hybrid model combining defined benefit (gratuity) and defined contribution (CPS) elements to balance costs.
The Association of Senior Civil Servants of Nigeria (ASCSN) has welcomed the move, having advocated for gratuity restoration for years. The scheme is seen as a vital step towards improving retirees’ financial security, particularly as inflation erodes pension values. With PenCom’s commitment to issue necessary circulars and engage stakeholders, civil servants are hopeful that the gratuity revival will bring lasting benefits.
