The Ogun State government has unveiled a new pension reform initiative aimed at enhancing retirement security for public servants, approving an additional pension benefit to complement the existing contributory pension scheme.
The decision was announced during a stakeholders’ meeting convened by the Commissioner for Finance and Chief Economic Adviser, Dapo Okubadejo, following consultations with government officials, labour leaders, pension fund administrators, and pension fund management committees.
Speaking at the meeting, Okubadejo emphasised that compliance with the contributory pension scheme law remains mandatory, describing the scheme as beneficial to both workers and the state.
He noted that although the scheme differs significantly from the former defined benefit scheme, the administration of Governor Dapo Abiodun is determined to address identified gaps in the contributory system.
The commissioner said the newly approved additional pension benefit is consistent with existing pension laws and is intended to serve a purpose similar to the gratuity system under the old direct benefit scheme, albeit with a different calculation model.
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He explained that the additional benefit would be computed based on defined service-year brackets and applicable salary scale rates, adding that the structure is expected to be more favourable to a majority of retirees.
Describing the initiative as unprecedented in Nigeria, Okubadejo said the APB is designed to improve confidence in the CPS and reassure workers about their post-service financial security.
He further disclosed that the APB would run for an initial period of 10 years as a compensatory measure for retirees affected by delays in the remittance of accrued pension rights by previous administrations, delays that deprived beneficiaries of potential investment returns.
The new benefit, he said, is intended to mitigate the financial impact of those lapses and provide equitable relief to retirees.
On sustainability, Okubadejo observed that large lump-sum withdrawals often erode retirees’ monthly pension income.
Consequently, the state plans to seek approval from the National Pension Commission to ensure that pension contributions are largely preserved for periodic payments, while the APB will function as a one-off retirement top-up beginning in July 2025.
He also urged relevant ministries, PFAs, and labour unions to enhance service delivery, intensify awareness campaigns, and organise structured pre-retirement training programmes at least six months before workers leave service.
The reform, he added, reflects the state government’s proactive approach to pension administration and its commitment to safeguarding the welfare of its workforce.
