saving jar labeled retirement with reading glass on the wooden background
The Federal Government has finalised the breakdown of a ₦757.98 billion pension bond aimed at clearing longstanding pension arrears under the Contributory Pension Scheme (CPS). This move, concluded on 22 July 2025, is expected to provide long-awaited relief for over 250,000 federal retirees who have faced persistent delays in accessing their entitlements.
Announced earlier this year by President Bola Tinubu and approved by the Federal Executive Council (FEC) on 4 February 2025, the pension bond is designed to address legacy pension liabilities inherited from the transition to the CPS. The National Pension Commission (PenCom) confirmed the final allocation this week, noting that the disbursement will help restore public confidence in the pension system and ensure timely retirement benefits.
Of the total sum, ₦253 billion will go towards settling accrued pension rights for retirees from treasury-funded Ministries, Departments and Agencies (MDAs). A further ₦388 billion has been allocated to cover outstanding pension increases dating back to 2007. This portion alone is expected to benefit over 250,000 retirees.
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Additionally, ₦107 billion has been earmarked for the long-overdue funding of the Pension Protection Fund (PPF), a statutory fund created in 2014 to support low-income earners under the CPS. Until now, the PPF has remained unfunded, limiting access to pension support for vulnerable groups.
Describing the bond approval as “a new dawn for pensioners,” PenCom’s Director-General, Mrs Omolola Oloworaran, said the initiative marked a pivotal moment in Nigeria’s ongoing pension reform agenda.
The CPS was introduced through the Pension Reform Act of 2004 to replace the former Defined Benefit Scheme (DBS). It mandates contributions from both employers and employees and is administered by licensed Pension Fund Administrators (PFAs). While the scheme has grown steadily—reaching ₦24.11 trillion in assets by May 2025—it has struggled to resolve legacy liabilities, especially for those who transitioned from the DBS.
As of 2023, the Federal Government’s total outstanding pension obligations stood at ₦314.58 billion. The latest bond arrangement also includes specific provisions for university professors, many of whom have been demanding pension parity with their final salaries since 2017.
The Pension Fund Operators Association of Nigeria (PenOp) has commended the bond plan, stating that it would alleviate financial pressure on affected pensioners and boost confidence in the pension sector. Other stakeholders have similarly welcomed the move, describing it as evidence of the government’s renewed focus on retiree welfare.
The Debt Management Office (DMO) is expected to issue the bond within the next three months. This will enable Pension Fund Administrators and institutional investors to subscribe, facilitating timely disbursement of the funds.
