The implementation of pension reforms across Nigerian states suffered a significant setback in the fourth quarter of 2025 as political calculations ahead of the 2027 general elections increasingly overshadow governance priorities.

Latest data from the National Pension Commission (PenCom) shows that efforts to expand the Contributory Pension Scheme (CPS) at the subnational level recorded no measurable progress during the quarter, despite ongoing engagement with state governments.

The development highlights a widening gap between pension reform commitments and actual implementation, as many states redirect attention toward political realignments, succession battles, and election preparations.

Only 8 States Fully Compliant With CPS

According to PenCom’s Q4 2025 industry report, only eight of Nigeria’s 36 states and the Federal Capital Territory are fully compliant with the Contributory Pension Scheme framework established under the Pension Reform Act.

This figure remained unchanged throughout the quarter, indicating a complete halt in momentum for expanding pension coverage across the country.

Industry observers say this stagnation comes at a critical time, as Nigeria’s pension assets have surpassed N30 trillion, making the sector one of the country’s most important sources of long-term domestic capital.

PenCom Raises Concern Over Implementation Gap

PenCom Director-General, Omolola Oloworaran, told state heads of service that workers’ retirement security is at risk not because of a lack of laws, but due to weak implementation.

She described pension reform as a legal and constitutional obligation, citing Section 210 of the 1999 Constitution.

“The challenge is no longer the enactment of laws. The challenge is the discipline of execution, regular remittance of contributions, funding of accrued rights, and establishment of functional institutions,” she said.

17 States Stuck in “Legislation Without Action”

The report shows that 17 states have enacted pension reform laws but have failed to fully implement the CPS.

This means that while legal frameworks exist, many public sector workers in these states remain outside the protection of a fully functional contributory pension system.

PenCom described these states as key priorities for future compliance efforts.

“The law exists. What is missing is operational follow-through,” the commission noted.

Politics Slowing Reform Momentum

Observers warn that increasing political activity ahead of the 2027 elections is slowing reform momentum across states.

Governors are increasingly focused on succession planning, coalition building, and party negotiations—activities that are now dominating state policy agendas.

Pension experts argue that this shift reflects a broader tension between short-term political interests and long-term governance obligations.

The Contributory Pension Scheme requires steady employer contributions, transparent remittance systems, and settlement of accrued liabilities—steps that demand fiscal discipline often avoided for political reasons.

Workers Still Exposed to Pension Uncertainty

The delay in implementation has left many state workers vulnerable, especially in states still operating under the outdated Defined Benefits Scheme.

Takor, a lawyer and executive director of the Centre for Pension Right Advocacy, called for stronger action from civil society and labour unions, including the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC).

He urged them to mobilise workers in defence of pension rights and resist practices that undermine retirement security.

States With Progress and Exceptions

Despite widespread stagnation, a few states have made notable progress.

Kaduna State has reportedly settled about N11 billion in outstanding pension obligations, with plans to clear the remaining N14 billion within two years, according to Governor Uba Sani.

Edo State also hosted a State Consultative Forum aimed at strengthening pension administration and improving compliance.

However, overall national progress remains limited.

Kano Faces Regulatory Challenges

PenCom raised concerns about Kano State, which, despite progress in legislation, still operates outside the regulatory framework.

Pension funds in the state are reportedly held in commercial banks rather than being managed by licensed Pension Fund Administrators (PFAs), contrary to regulatory requirements.

The commission says Kano will require targeted intervention to fully integrate into the national pension system.

Jigawa Remains a Model

Jigawa State remains one of the few states fully aligned with pension reform objectives, operating a contributory defined benefits structure that meets CPS standards.

Outlook for 2026 and Beyond

PenCom is expected to convene a States Compliance Roundtable in early 2026 to accelerate CPS adoption and improve remittance systems.

However, stakeholders say success will depend on political will at the state level, especially as election activities intensify.

With pension funds increasingly used to finance infrastructure and capital market investments, broader CPS adoption could strengthen both retirement security and Nigeria’s long-term financial stability.

As 2027 approaches, the key question remains whether state governments will prioritise pension reform or continue to allow political considerations to delay long-term social protection reforms.

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The Federal Executive Council has approved a new exit benefit scheme that will grant retiring federal civil servants a gratuity equivalent to 100 percent of their total annual emoluments.

The new policy, which took effect from January 1, 2026, is designed to strengthen the welfare structure within Nigeria’s federal civil service and provide improved financial security for retiring officers who have served the nation for at least ten years.

Details of the approval were disclosed in a statement issued by the Office of the Head of the Civil Service of the Federation.

According to the statement, the gratuity scheme was introduced following recommendations made by an inter-ministerial technical committee established to review retirement benefits for federal workers.

The committee worked closely with key government institutions including the National Pension Commission, the Budget Office of the Federation, and the Office of the Accountant-General of the Federation to develop a sustainable structure for implementing the benefit.

Strengthening retirement benefits

Under the newly approved scheme, eligible federal civil servants will receive a lump-sum gratuity equal to their total annual salary and allowances upon retirement.

Officials said the initiative is intended to complement the existing pension framework while ensuring that civil servants who dedicate years of service to the government retire with improved financial support.

The scheme will apply to employees working in treasury-funded ministries, extra-ministerial departments and agencies across the federal government.

Authorities noted that the move represents a significant step toward strengthening retirement income security for public servants.

Government officials believe the initiative will boost morale within the civil service and reassure workers of the government’s commitment to their welfare.

Recognition of civil servants’ contributions

Reacting to the development, the Head of the Civil Service of the Federation, Didi Walson-Jack, commended the council for approving the policy.

She described the new exit benefit as a landmark decision that recognises the dedication and sacrifices made by federal civil servants over the years.

According to her, the approval demonstrates that the administration of President Bola Tinubu acknowledges the role played by public servants in national development.

“This approval is a profound acknowledgement of the invaluable contributions of our civil servants who have devoted their productive years to public service and national development,” she said.

Walson-Jack added that the introduction of the gratuity scheme would significantly improve retirement packages for government workers while reinforcing confidence in the federal government’s commitment to civil service welfare.

She also noted that the new policy forms part of ongoing reforms aimed at building a more efficient, motivated and performance-driven public service.

Civil service reform and motivation

Experts say improved welfare packages for government workers often contribute to increased productivity, better morale and enhanced professionalism within the public sector.

By strengthening retirement benefits, policymakers hope to encourage long-term commitment among civil servants and attract skilled professionals into government service.

The reintroduction of gratuity also marks a significant policy shift within Nigeria’s public sector retirement framework.

Nigeria moved away from the traditional gratuity system in 2004 when the government introduced the Contributory Pension Scheme to address challenges associated with pension liabilities and payment delays.

The new scheme approved by the council does not replace the existing pension system but rather complements it by providing an additional financial cushion for retirees.

Implementation guidelines underway

Government officials said detailed guidelines for implementing the scheme would be issued in due course to ensure smooth rollout across federal institutions.

Authorities are also expected to clarify operational procedures, eligibility conditions and payment structures for beneficiaries.

Observers say the policy could help restore confidence among civil servants who have long raised concerns about retirement benefits and pension security.

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