PenCom, Head of Service Propose Gratuity Scheme For Civil Servants
…New Initiative To Gulp N100bn Annually
The National Pension Commission (PenCom) and the Office of the Head of the Civil Service of the Federation (OHCSF) are collaborating to introduce a Gratuity Framework for civil servants in treasury-funded Ministries, Departments, and Agencies (MDAs) under the Contributory Pension Scheme (CPS).
This development followed a high-level meeting held in Abuja, where the Director-General of PenCom, Ms. Omolola Oloworaran, paid a courtesy visit to the Head of the Civil Service of the Federation (HCSF), Mrs. Didi Esther Walson-Jack.
Gratuity is a payment made to an employee by an employer, often upon retirement or resignation, as a reward for their service and dedication.
It’s a lump sum, typically calculated based on the employee’s salary and length of service. It can also refer to a tip given to service workers.
Here’s a more detailed explanation:
Speaking about boosting retirement benefits, Oloworaran told the Head of Service that 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 N30bn per annum as determined by PenCom and confirmed by the 2024 Stakeholders Committee on outstanding pension liabilities, if retiring federal employees are paid 100 per cent of their last gross annual remuneration.
She said the amount represented a modest but impactful intervention to improve the welfare of those who have served the nation with dedication.
Furthermore, the DG of PenCom highlighted the persistent issue of delayed pension payments due to delay in payment of Accrued Rights.
She noted that previous collaboration between PenCom and the Office of the Head of Service yielded significant progress, including securing a Federal Executive Council (FEC) approval for a N758bn bond to clear outstanding pension liabilities under the CPS.
Oloworaran unveiled a one-time, comprehensive online enrolment exercise to establish the accrued pension rights liability of all serving federal employees of treasury-funded MDAs who were in service prior to June 2004.
She said this online verification and enrolment exercise, which will commence from August 2025, will enable PenCom present to the Federal Government the amount so determined with a view to possibly raise a Bond to settle the entire liability once and for all.
The DG added that the determined accrued pension rights for every eligible civil servant will be credited into their individual Retirement Savings Accounts (RSAs).
On the benefits of the enrolment, the PenCom DG said retirees will start earning returns on these funds, and the system becomes shielded from political transitions, as Pension Fund Administrators (PFAs) will take full control.
In addition, Oloworaran told the Head of Service that PenCom is developing a digital application to streamline the enrolment process.
PenCom plans to deploy the online application by August 2025. She sought OHCSF’s support to issue a circular directing all MDAs to participate in the enrolment and submit the necessary documentation.
Speaking on the challenge of uncredited pension contributions among MDAs not enrolled in the Integrated Payroll and Personnel Information System (IPPIS). Oloworaran said that contributions are often made without accompanying schedules.
To address this, the DG said PenCom has introduced a new Pension Contribution Remittance System that requires all employers to henceforth, utilise selected Payment Solution Support Providers (PSSPs) for the remittance of their employees’ contributions.
This ensures accurate and prompt remittance of pension contributions into respective RSAs of employees.
The DG requested the Head of Service’s assistance in issuing directives to IPPIS Office in the Office of the Accountant General of the Federation (OAGF) and MDAs not on IPPIS, such as tertiary institutions, self-funding agencies, and others to henceforth, utilise selected PSSPs for remittance of monthly contributions, effective June 2025,
In response, Walson-Jack, expressed her full support for all the initiatives and commended PenCom for its proactive approach to improving pension administration.
She pledged to issue the necessary circulars to MDAs and to collaborate closely with PenCom in developing the modalities and securing the approvals for the Gratuity Scheme.
Mrs. Walson-Jack said civil servants have been calling for gratuity and expressed her full backing for the proposed Gratuity Scheme.
To cement the partnership, PenCom and OHCSF agreed to establish a Standing Committee to work on the outlined reforms and address any emerging issues in the future.
PenCom, Head of Service Propose Gratuity Scheme For Civil Servants is first published on The Whistler Newspaper
