The Ogun State Government has unveiled an Additional Pension Benefit (APB) to address concerns trailing the full implementation of the Contributory Pension Scheme (CPS), in a move stakeholders have described as innovative and fiscally sustainable.
The initiative, approved by Governor Dapo Abiodun, was announced in a communiqué issued after a series of consultative meetings involving organised labour representatives, members of the State and Local Government Pension Administration Committees, and the Commissioner for Finance and Chief Economic Adviser, Dapo Okubadejo.
The CPS became fully operational in the state on July 2, 2025, marking a significant shift from the former Defined Benefit Scheme (DBS). However, its implementation generated concerns among workers and retirees, particularly over the non-payment of gratuities traditionally embedded in the old system.
Bridging the Gap
According to the communiqué, the newly introduced APB is designed as a one-off payment at retirement to bridge identified gaps between the CPS and the DBS, especially regarding gratuity entitlements.
The benefit will be calculated using graded percentages of a retiree’s Final Total Annual Emolument (TAE), based on years of qualifying service. Eligible retirees are to receive between 116 per cent and 280 per cent of their final annual emolument as an additional benefit, depending on their length of service.
Unlike monthly pension payments, the APB will be paid directly to retirees at the point of exit from service. Meanwhile, balances in their Retirement Savings Accounts (RSAs) will remain intact to enhance and sustain monthly pension payouts.
Stakeholders at the consultative meetings described the APB as a strategic intervention that not only preserves the integrity of the CPS but also prevents the re-emergence of pension liabilities that plagued the previous system.
Billions Committed to Pension Stability
The communiqué detailed substantial financial commitments already made by the state government to stabilise the pension sector.
It revealed that ₦26.35 billion has been expended to offset outstanding gratuity liabilities. In addition, the government has commenced the amortisation of accrued gratuity arrears dating back to July 2012.
Further disclosures showed that ₦5.89 billion has been remitted as arrears of CPS deductions and accrued investment returns, while ₦500 million has been paid as death benefits into the RSAs of deceased retirees.
The state has also begun remitting accrued pension rights for eligible employees. Regular monthly remittances of employer and employee contributions into RSAs commenced in July 2025, and as of January 2026, total remittances stood at ₦3.19 billion.
“These steps reflect government’s unwavering resolve to build confidence in the CPS and entrench transparency and accountability in pension administration,” the communiqué stated.
Expanding Opportunities Under CPS
Beyond pension payments, stakeholders urged the government to explore the broader economic potential of pension assets at the national level, particularly in financing infrastructure and affordable housing.
Under the CPS framework, contributors can access up to 25 per cent of their RSA balance as equity contribution toward residential mortgages — a provision expected to widen home ownership opportunities for public servants.
The communiqué also recommended strengthening engagement with Pension Fund Administrators through more responsive communication channels, including toll-free lines, improved pre-retirement training programmes, publication of comprehensive Frequently Asked Questions on the CPS, and periodic electronic verification exercises to maintain accurate retiree records.
Balancing Welfare and Sustainability
Stakeholders reaffirmed their commitment to ensuring that pension reforms in Ogun State strike a balance between workers’ welfare and long-term fiscal sustainability.
Observers note that the introduction of the APB signals a deliberate effort by the Abiodun administration to consolidate pension reforms while addressing anxieties associated with the transition from the Defined Benefit Scheme to the CPS.
With billions already injected into clearing legacy liabilities and a structured additional benefit now in place, the state government appears determined to rebuild trust in the pension system and avert the crises that have historically undermined retirees’ financial security.
