The Federal Executive Council (FEC) has approved the payment of gratuity to retiring federal civil servants, marking a major policy shift more than two decades after the benefit was removed under Nigeria’s pension reforms.
The approval, announced through the Office of the Head of the Civil Service of the Federation, comes under the administration of Bola Ahmed Tinubu and is expected to take effect from January 1, 2026.
Under the new policy, federal civil servants who have served a minimum of 10 years will receive a one-time lump-sum gratuity equivalent to their total annual salary at the point of retirement.
According to details of the policy, the gratuity will be calculated based on a retiree’s last annual emolument. For instance, a civil servant earning ₦200,000 monthly at retirement will have an annual salary of ₦2.4 million, which will be paid as a lump-sum gratuity upon retirement.
Officials clarified that the gratuity payment will be separate from the retiree’s monthly pension benefits under the National Pension Commission Contributory Pension Scheme (CPS).
The decision effectively reintroduces a form of gratuity that was discontinued when Nigeria adopted the Contributory Pension Scheme in 2004.
Before the reform, retirees in the public service were entitled to both monthly pensions and gratuity payments. However, the introduction of the CPS shifted retirement benefits to a system based largely on mandatory contributions by employees and government into pension savings accounts, eliminating gratuity payments.
The new policy seeks to address concerns that many retirees under the CPS often receive limited lump-sum payouts from their pension savings.
Analysts say the reintroduced gratuity could provide financial relief and improved retirement welfare for civil servants.
The lump-sum payment may help retirees address immediate post-retirement needs such as housing, healthcare expenses, and small business investments.
Labour observers also note that the decision could boost morale within the federal civil service, as workers view it as recognition of their years of service.
Despite the positive reception in some quarters, experts say the gratuity amounts may still be modest when compared with the current cost of living.
For example: A civil servant earning ₦150,000 monthly would receive about ₦1.8 million as gratuity. One earning ₦200,000 monthly would receive ₦2.4 million. A worker earning ₦300,000 monthly would receive approximately ₦3.6 million.
Observers say while the policy represents a significant step toward strengthening retirement support, questions remain about the long-term sustainability of the funding and whether the payments will adequately support retirees in a challenging economic environment.
Overall, the approval by the Federal Executive Council signals a notable shift in Nigeria’s retirement policy framework, restoring a benefit absent for more than two decades and potentially providing a financial cushion for thousands of federal civil servants retiring in the coming years.
