EQUAL WORK, UNEQUAL RETIREMENT: THE LIE WE CALL PENSION REFORM

EQUAL WORK, UNEQUAL RETIREMENT: THE LIE WE CALL PENSION REFORM

I met a retired Superintendent of Police last month in Kaduna. Thirty-five years in uniform. He showed me his phone. His Retirement Savings Account (RSA) balance was Three Million Two Hundred Thousand Naira. His monthly pension after thirty-five years of chasing armed robbers? Twenty-one thousand naira.

In the same week, I met a retired staff member of the Nigerian National Petroleum Company Limited (NNPCL). Same thirty-five years. He laughed when I asked about his gratuity. “Over thirty million,” he said, alongside a monthly pension for life.

Same Federal Government. Same thirty-five years. One goes home as a king. The other goes home to beg.

If that does not anger you, you have not understood what a pension is supposed to be.

A pension is not an investment. It is not a market return. A pension is a promise a country makes to a child. It says: Let us protect you when you are a minor, you serve us when you are an adult, and we will take care of you when you are old and retired. That is the contract. Nigeria broke it.

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How Did We Get Here?

When the British were here, they created the Pension Ordinance of 1951. It was not originally designed for Nigerians; it was for British officers posted to the country, retroactive to 1946. We inherited it at independence in 1960 and kept it.

We called it the Defined Benefit Scheme (DBS), also known as Pay-As-You-Go (PAYG). The premise was simple: you work, you contribute nothing, and the government pays you from its budget upon retirement—giving you a lump-sum gratuity once and a monthly pension for life. The governing frameworks were Pension Decree No. 102 of 1979 for civil servants and Armed Forces Pension Decree No. 103 of 1979 for soldiers. For the private sector, we had the National Provident Fund (NPF) Act of 1961, later succeeded by the National Social Insurance Trust Fund (NSITF) Act of 1993.

It worked until we dismantled it ourselves—not because DBS is inherently flawed, but because of systemic failures: no database, no National Identification Number (NIN), no Biometric Verification Number (BVN), and no Treasury Single Account (TSA). Consequently, ghost pensioners flooded the system, budgets arrived late, and verification exercises were conducted under the scorching sun where elderly citizens collapsed on queues. By 2004, pension arrears had exceeded Two Trillion Naira.

Consequently, in 2004, President Olusegun Obasanjo sought reform. On June 25, 2004, he signed the Pension Reform Act (PRA 2004), establishing the Contributory Pension Scheme (CPS). Under this system, every worker maintains a personal RSA with a Personal Identification Number (PIN). Both employer and employee contribute—currently 10% from the employer and 8% from the employee, totalling 18% following the amendments in the Pension Reform Act 2014. The funds are managed by Pension Fund Administrators (PFAs), safeguarded by Pension Fund Custodians (PFCs), and regulated by the National Pension Commission (PenCom).

It sounded progressive on paper. But listen to what happened next.

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The Day We Created Two Nigerias

The CPS was modelled after the Chilean Pension Scheme. In Chile, however, both the military and the police were exempted from contributory pensions due to the inherent risks of their duties. Nigeria copied Chile only halfway.

We exempted the Nigerian Army, Navy, and Air Force through the Military Pensions Board (MPB). We exempted the Department of State Services (DSS), the Defence Intelligence Agency (DIA), the National Intelligence Agency (NIA), the Central Bank of Nigeria (CBN), NNPCL, the Economic and Financial Crimes Commission (EFCC), and other bodies with special boards. They remained on the Defined Benefit structure—making zero personal contributions while the government funds 100% of their retirement for life.

Meanwhile, we left the Nigeria Police Force (NPF), the Nigeria Security and Civil Defence Corps (NSCDC), the Federal Civil Service, teachers, nurses, and all Ministries, Departments, and Agencies (MDAs) trapped under the CPS.

Ask yourself: if an official at Defence Headquarters (DHQ) enjoys DBS, why should an officer at the Ministry of Defence who typed the exact same memo and worked alongside them for thirty-five years be subjected to the CPS? If an employee at NNPCL receives a comfortable, life-long pension, why should a worker at the Ministry of Petroleum Resources—who actually supervises NNPCL—receive a paltry sum? Is the civil service any less vital than a public corporation?

We turned retirement into a contest over who faces more danger. But how is risk defined? Is intellectual exhaustion every day not risky? Is a task whose error can damage national reputation or stall an entire ministry not risky? A teacher who imparts flawed knowledge risks a generation. A nurse who administers the wrong injection risks a life. A clerk at the Ministry of Finance who misfiles a document risks billions. Risk is not exclusive to carrying a firearm; risk is responsibility.

Every worker has equal rights. Naturally, everyone now wants an escape route.

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The Pushback and the Reality

Today, the Nigeria Police Force Pension Board Establishment Bill, 2025 (known as the Police Exit Bill) seeks to extract the police from the CPS, placing them under a dedicated Police Pension Board funded directly from the Consolidated Revenue Fund rather than an RSA. The National Assembly passed it on December 4, 2025, and transmitted it to President Bola Ahmed Tinubu, GCFR, on March 16, 2026. It currently awaits presidential assent. One specific provision anchors the core argument of this piece: no retired police officer under the new framework is to receive less than 85% of their total emoluments as a pension. That single clause is the barrier separating a degrading Twenty-One Thousand Naira monthly payout from a dignified retirement. It explains why retired officers have staged protests at the National Assembly and Aso Rock gates, chanting, “Police dey work, PenCom dey chop.”

The police represent just the frontline case study. Other services are waiting in the wings: the Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS), Nigerian Correctional Service (NCoS), and Federal Fire Service (FFS). They are all watching closely to launch their own legislative bids for a return to DBS. Should the police succeed, a domino effect will follow, likely steering us back to a pre-2004 reality where everyone relies on DBS.

And perhaps that is not inherently negative. After all, the Defined Benefit model remains superior because a nation should honour its word. What required updating back then was never the scheme itself; it was the administration—proper databases, NIN, BVN, TSA, and transparently published monthly nominal rolls. If the DBS can be integrated with a modernized system like the Integrated Payroll and Personnel Information System (IPPIS), it will significantly boost overall employee morale, knowing that retirement comes with a guaranteed gratuity and a high percentage of one’s last earned monthly salary. Furthermore, much of the resistance we see today—such as the stubborn refusal to retire, illegal extensions of service years, a lack of commitment or diligence on the job, and systemic vulnerabilities like bribery, corruption, and embezzlement—stems directly from the profound fear of facing a destitute retirement under the current framework.

To be fair to the current administration, adjustments have been made. In March 2026, the Federal Executive Council approved a new gratuity framework for federal civil servants under the CPS, retroactive to January 1, 2026. Any officer in a treasury-funded MDA with at least ten years of service now qualifies for a gratuity equivalent to 100% of their total annual emoluments—a full year’s salary package—stacked on top of whatever their RSA yields monthly. Head of the Civil Service Didi Walson-Jack framed it as long-overdue recognition, developed through collaborative technical work by the OHCSF, PenCom, the Budget Office, and the Office of the Accountant-General. Separately, the Pension Transitional Arrangements Directorate has cleared legacy Defined Benefit arrears—releasing ₦758 billion for CPS-related pension and gratuity arrears alongside ₦58 billion for old DBS retirees via the 2026 Appropriation Act.

This intervention matters and deserves transparent acknowledgement rather than concealment. It marks the first time since 2004 that Abuja has effectively conceded that CPS retirees were previously sent packing with an RSA payout and nothing else, while their DBS counterparts secured both a lump sum and a monthly Treasury cheque. Granted, this new policy does not bridge the structural RSA gap—a police superintendent’s ₦21,000 monthly allowance remains untouched—but it closes half the distance regarding the gratuity deficit, which previously stood at zero.

Even so, it does not settle the underlying structural grievance. The gratuity is a one-off annual salary equivalent. NNPCL and DHQ retirees continue to walk away with tens of millions in cash alongside a guaranteed monthly pension indexed entirely to the government’s fiscal capacity. Conversely, a civil servant under the new arrangement receives a single lump sum before reverting to whatever meager sustainment their RSA provides—which, given Nigerian wage scales and an 18% contribution threshold, stretches thin in advanced age. The gap has narrowed, but it has not closed.

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The Path Forward

We must stop deceiving ourselves into believing the CPS is superior. The CPS relies on market luck; the DBS relies on a binding social contract. A country ought to be a keeper of promises.

We require a singular structural fix: any pension privilege enjoyed by NNPCL staff must extend to the Ministry of Petroleum. Any retirement security afforded to DHQ must mirror that of the Ministry of Defence. Equal work demands equal retirement. The 85% safety floor established in the Police Exit Bill provides a clear template—encode that exact baseline into a single harmonising Act covering every MDA, sparing future parliaments from fighting piecemeal battles agency by agency, bill by bill, over the next two decades.

Furthermore, we must fund pensions as a first-line charge directly from the Federation Account, mirroring the statutory transfers afforded to states and the National Judicial Council before the broader budget is touched. A first-line charge cannot be starved by an appropriations committee or stalled by cash-flow crunches the way discretionary budget lines often are; it is deducted at source before funds are ever made available for political overheads or convoys. That is what transforms a policy from an empty promise into an ironclad guarantee.

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The Bottom Line

We are right that pension is killing morale. The new gratuity scheme proves government knows this and can act on it. But low RSA on its own was never the real disease. Inequality is the disease. A government that tells a young man to give it thirty-five years and then pays him Twenty-One Thousand Naira has told serving officers that loyalty does not pay. That is where extortion starts. That is where corruption starts.

We do not need PenCom to divide us. We need leadership to keep its promise: Protect me when I am a minor, I serve you when I am an adult, you take care of me when I am retired.

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💬 One question worth sitting with: If we leave this structural inequality intact, are we not effectively asking for the exact institutional decay, lack of commitment, and corruption we keep complaining about?

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Written by Emmanuel Abel Manchai

Strategic and Historical Analyst | Critical Thoughts

#PensionReform #NigeriaEconomy #EqualWorkEqualRetirement #CriticalThoughts #NigerianPolitics #PublicService #GoodGovernance #PoliticalAnalysis #NigerianVoice