IN A LANDMARK decision poised to boost the morale and financial security of the nation’s workforce, the Federal Executive Council (FEC) has approved the restoration of a full gratuity package for Federal Civil Servants retiring after years of service.
The approval, announced on Wednesday, March 5, 2026, via a press release signed by Eno Olotu, Director, Press and Public Relations, Office of the Head of the Civil Service of the Federation, ends a 22-year period during which this crucial safety net was absent for workers under the federal government’s payroll.
Effective from January 1, 2026, the new Exit Benefit Scheme will grant qualifying retiring civil servants a gratuity equivalent to 100% of their total annual emolument.
The scheme is a strategic enhancement to the existing Contributory Pension Scheme (CPS) and is designed to provide a substantial financial buffer for officers who have devoted a minimum of ten years to public service.
According to the press release, the Head of the Civil Service of the Federation, Mrs. Didi Esther Walson-Jack, described the FEC’s approval as a “watershed” moment, commending it as a bold acknowledgment of the sacrifices made by public servants.
“This approval is a profound acknowledgement of the invaluable contributions of our Civil Servants who have devoted their productive years to public service and national development,” Mrs. Walson-Jack stated. “The Exit Benefit Scheme significantly enhances the retirement package of our officers and boosts confidence in the Federal Government’s commitment to their welfare.”
The press release disclosed that comprehensive implementation guidelines would be communicated to all Ministries, Departments, and Agencies in due course.
The announcement was met with jubilation across federal secretariats, with labour unions lauding the move. The Association of Senior Civil Servants of Nigeria (ASCSN) hailed the decision, noting it was the culmination of decades of advocacy.
“We are really glad that after decades of struggles by the Union to ensure that Federal Civil Servants who have served the country… can now be rewarded as it used to be in the past,” the union stated, recalling numerous memoranda sent to the government since 2004.
Wednesday’s approval marks a significant policy reversal, reintroducing a benefit that was effectively discontinued following the enactment of the Pension Reform Act of 2004.
That Act introduced the Contributory Pension Scheme (CPS), which was designed to address the massive inefficiencies and unsustainable costs of the old Defined Benefit Scheme (DBS), where the government bore the full burden of monthly pension payments. The new law aimed to create a sustainable, funded system where workers and employers contribute to individual Retirement Savings Accounts (RSAs).
However, the transition to the CPS created a contentious void. While the old scheme typically provided retirees with a one-off, lump-sum gratuity in addition to a monthly pension, this component was largely discontinued for public servants under the new federal structure. Although the Pension Reform Act did not explicitly abolish gratuity in all sectors, its implementation for treasury-funded federal ministries and agencies ceased.
This created a perceived inequality. As the Trade Union Congress (TUC) has previously argued, while the average civil servant who served for 35 years saw his gratuity discontinued, political and judicial office holders – who serve for shorter tenures – remained entitled to generous severance packages under separate legislation.
Labour unions and pensioners’ advocacy groups have long maintained that the cessation of gratuity was a violation of the spirit of Section 173 of the 1999 Constitution, which contemplates the payment of pensions and gratuities to public service employees.
The resulting financial pressure on retirees has been immense. Under the current CPS, a retiree’s lump sum is derived solely from the balance in their RSA, often leaving them with far less immediate capital than the traditional gratuity would have provided. One analysis noted that under the old constitutional system, a worker retiring after 35 years could be entitled to 300% of their annual gross salary as gratuity, a figure far above what the CPS alone currently offers.
The push for a return to gratuity gained serious momentum in mid-2025. The Director-General of the National Pension Commission (PenCom), Ms. Omolola Oloworaran, had proposed the reintroduction of the benefit during a meeting with the Head of Service, pitching it as a feasible and affordable reform. An Inter-Ministerial Technical Committee, which included PenCom and the Budget Office, was subsequently constituted to design a sustainable framework.
The committee’s work culminated in the FEC approval, which effectively rights a historical wrong. Stakeholders had previously warned that for the scheme to be bulletproof, it would require legal backing, potentially necessitating an amendment to the PRA 2014 to clearly provide for this new layer of benefit. The government is now expected to release comprehensive implementation guidelines. (6)
The new scheme will see the government provide a defined benefit (the 100% gratuity) alongside the existing defined contribution (the CPS), creating what experts describe as a “hybrid” system . It is expected to cost the federal government an estimated N30 billion to N35 billion annually, a sum analysts have described as a worthy investment in the welfare of the nation’s workforce, representing less than one percent of the national budget.
