₦758bn Pension Bond: DBS Pensioners Left In Limbo?

The massive ₦758 billion pension bond proposal currently before the National Assembly has generated considerable attention for its potential to address Nigeria’s mounting pension crisis, yet beneath the headlines lies a troubling question about who exactly will benefit from this unprecedented fiscal intervention. While President Bola Tinubu’s administration positions this bond as a comprehensive solution to pension arrears, the systematic exclusion of Defined Benefit Scheme pensioners and retirees from defunct government agencies reveals disturbing gaps in what should be an inclusive approach to pension reform.

On Tuesday, President Tinubu transmitted three separate letters to the National Assembly, with Speaker Tajudeen Abbas reading the requests on the floor of the House of Representatives. The comprehensive package includes approval for new external borrowing exceeding $21.5 billion alongside the domestic bond issuance of ₦757.9 billion specifically earmarked to settle outstanding national pension liabilities under the Contributory Pension Scheme as of December 2023. Referencing the provisions of the Pension Reform Act 2014, Tinubu acknowledged that the government has struggled to meet its pension obligations over the years due to persistent revenue challenges, arguing that settling these outstanding liabilities would alleviate hardship for retirees, restore confidence in the pension system, boost morale among public servants, and stimulate broader economic growth through increased liquidity injection into the economy.

The Federal Executive Council has granted approval for this bond issuance on February 4, 2025, and the proposal now undergoes legislative scrutiny through the Committee on National Planning and Economic Development and the Committee on Pensions. In his appeal to lawmakers for timely approval, President Tinubu acknowledged both the benefits and cost implications of the proposed bond issuance, including the expected increase in public debt stock and debt servicing obligations, assuring the National Assembly of his administration’s commitment to transparency and accountability while expressing hope for progression and timely approval of the House of Representatives.

At ₦758 billion, this bond represents one of the largest single allocations toward pension settlement in Nigeria’s history, signaling the administration’s recognition of the pension crisis as both a humanitarian concern and an economic imperative. The government argues that settling these arrears will alleviate the hardship faced by thousands of retirees, boost morale within the public service, and stimulate broader economic growth through increased consumer spending. However, the exclusion of significant categories of pensioners raises fundamental questions about the equity and comprehensiveness of this intervention.

The Defined Benefit Scheme, which predates the current Contributory Pension Scheme, covers many of Nigeria’s longest-serving public servants who dedicated their careers to national service under explicit government guarantees of post-retirement security. These pensioners, who served under a system that guaranteed fixed pension amounts based on years of service and final salary, now find themselves relegated to secondary consideration despite their equally legitimate claims on government resources. While CPS beneficiaries will receive comprehensive debt relief through bond financing, DBS pensioners remain trapped in a cycle of delayed payments and unfulfilled promises, creating a troubling disparity in the government’s approach to pension obligations.

Perhaps even more painful is the complete abandonment of pensioners from defunct government agencies, including former employees of NICON Insurance, NITEL, MTEL, and other dissolved parastatals, from both the pension bond settlement and the proposed ₦32,000 wage award and other entitlements. These forgotten retirees represent a particularly vulnerable segment of Nigeria’s pension crisis, having served in institutions that were once pillars of the nation’s economic infrastructure but were subsequently abandoned by successive administrations. Their exclusion from comprehensive pension reforms highlights the government’s selective amnesia regarding its obligations to those who built Nigeria’s foundational institutions.

The former employees of NICON Insurance, NITEL, MTEL, and similar institutions who contributed to Nigeria’s development during their operational years now find themselves fighting for basic recognition of their service, let alone fair compensation. Their exclusion from the ₦32,000 wage award and other recent government entitlements compounds their suffering and demonstrates the government’s selective application of social protection policies. These agencies once employed thousands of Nigerians who paid taxes, contributed to pension funds, and helped build critical infrastructure, yet their dissolution has been accompanied by wholesale abandonment of accompanying obligations to retirees.

The role of labour unions, particularly the Nigeria Union of Pensioners, in advocating for comprehensive pension reforms has been notably inconsistent regarding defunct agency retirees. While NUP has maintained active campaigns for federal civil service pensioners and those under established schemes, their advocacy for dissolved agency pensioners has been markedly less vigorous. This disparity in union representation has left former employees of defunct agencies without strong institutional voices to champion their cause, contributing to their marginalization in policy discussions and settlement negotiations.

Media coverage of pension issues has similarly marginalized the stories of defunct agency retirees, focusing instead on dramatic headlines about federal workers’ strikes and protests while ignoring the quiet suffering of forgotten pensioners. This media blind spot has contributed to public ignorance about the scope of Nigeria’s pension crisis and enabled government neglect of these vulnerable populations. Mainstream coverage of pension issues has largely focused on active federal civil servants and established pension schemes, while systematically ignoring the plight of dissolved agency pensioners.

From a fiscal perspective, the ₦758 billion bond issuance will undoubtedly strain Nigeria’s already precarious debt profile. The country’s public debt stock has grown exponentially in recent years, with debt servicing consuming an increasingly disproportionate share of government revenue. While the immediate injection of liquidity may provide temporary relief to CPS beneficiaries, the long-term implications of adding nearly ₦800 billion to the national debt burden cannot be ignored. Future generations of Nigerians will bear the cost of servicing this debt, potentially constraining the government’s ability to invest in critical infrastructure and social services.

The economic rationale for pension bond issuance, while compelling in theory, demands careful scrutiny in practice. The government’s assertion that increased liquidity among pensioners will stimulate economic growth assumes that these funds will circulate efficiently within the domestic economy. However, given Nigeria’s high import dependency and the tendency for increased consumer spending to drive imports rather than local production, the multiplier effect may be limited. Additionally, the inflationary pressures that could result from injecting ₦758 billion into the economy risk eroding the real value of pension payments, potentially negating some of the intended benefits.

The timing of this bond proposal also merits examination. Coming amid broader economic challenges including naira volatility, rising inflation, and fiscal pressures, the decision to pursue such massive borrowing raises questions about prioritization and fiscal discipline. While pension obligations are undeniably important, the government must demonstrate that this intervention represents the most efficient use of borrowed resources compared to alternative approaches such as gradual settlement through improved revenue generation or systematic pension reform.

The multiple tiers of pension treatment that have emerged create a troubling hierarchy of government obligations that undermines the principle of equal treatment under the law. Many excluded retirees are elderly, with limited alternative sources of income and mounting healthcare costs, yet they face complete abandonment while others receive comprehensive debt relief. This selective approach to pension settlement suggests either inadequate planning or deliberate discrimination against vulnerable populations who lack political visibility or organized advocacy.

The government’s communication strategy around this bond proposal has been inadequate, failing to provide clear explanations for the exclusion of DBS pensioners or detailed timelines for addressing their concerns, while maintaining complete silence on defunct agency obligations. This opacity undermines public confidence and fuels suspicions about the government’s true commitment to comprehensive pension reform. The Nigeria Union of Pensioners, despite its mandate to represent all categories of retirees, has shown varying levels of advocacy intensity, with dissolved agency pensioners receiving significantly less attention and resources compared to their federal civil service counterparts.

This uneven representation has allowed government officials to ignore the most vulnerable pensioner categories while focusing resources on more politically visible groups. The silence surrounding the plight of NICON Insurance, NITEL, MTEL, and other dissolved agency pensioners is particularly disturbing, as these individuals often lack organized representation and media attention to amplify their grievances. Without transparent communication about the rationale, implementation timeline, and expected outcomes across all pensioner categories, public support and accountability remain elusive.

The resolution of this pension exclusion crisis demands decisive actions from key federal financial institutions, each bearing distinct responsibilities that could illuminate the troubling mystery surrounding the systematic exclusion of seven defunct agencies from the ₦32,000 wage award and other entitlements. The Minister of Finance, Mr. Wale Edun, occupies the most critical position in addressing this exclusion crisis, holding primary responsibility for comprehensive policy review and fiscal reconciliation across all government obligations. His office must conduct an exhaustive audit of all pension and wage liabilities inherited from dissolved agencies, establishing clear databases of affected retirees and their entitlements while championing their inclusion in budget allocations and advocating for supplementary appropriations where necessary to address historical oversights.

The Office of the Accountant General of the Federation bears equally weighty responsibilities in resolving this exclusion mystery, maintaining the most comprehensive records of government financial obligations and possessing the technical capacity to trace pension fund contributions made by dissolved agencies and their employees. This office must undertake detailed reconciliation of all pension assets and liabilities transferred during agency dissolutions, identifying gaps in record-keeping that may have contributed to the systematic exclusion of these retirees while establishing dedicated units to manage defunct agency pension obligations for future dissolutions.

The National Salaries, Incomes and Wages Commission holds the mandate to ensure fair and equitable compensation across the federal service, making its role in addressing defunct agency exclusions particularly significant. The Commission must expand its scope to include comprehensive review of wage policies affecting all categories of federal retirees, conducting comparative analysis of entitlements across different pensioner categories and recommending policy adjustments to eliminate discriminatory practices while developing frameworks for automatic inclusion of defunct agency retirees in future wage awards and benefit adjustments.

The Pension Transitional Arrangement Directorate represents the most specialized institution in this remedial effort, given its specific mandate to manage pension obligations for federal retirees. PTAD must undertake comprehensive enrollment drives to capture all defunct agency pensioners who may have been inadvertently excluded from its databases, establishing special verification processes for dissolved agency retirees while advocating for dedicated budget lines to address pension arrears and ensuring that future pension bond allocations include proportional provisions for these forgotten retirees.

Legislative oversight of this bond proposal will be crucial in determining its ultimate success or failure. The National Assembly must demand comprehensive details about the government’s pension strategy, including timelines for addressing DBS obligations, mechanisms for preventing future accumulation of pension arrears, and measures to ensure transparent utilization of bond proceeds. Without robust parliamentary scrutiny, this intervention risks becoming another expensive band-aid solution that fails to address underlying systemic problems while leaving the most vulnerable pensioners in continued limbo.

The broader implications for Nigeria’s pension system reform agenda cannot be ignored. While clearing existing arrears through bond financing may provide temporary relief, it does nothing to address the structural problems that created these liabilities in the first place. Without comprehensive reform of pension administration, improved revenue collection, and better fiscal management, Nigeria may find itself facing similar crises in the future, potentially requiring even larger bailouts that the country can ill afford.

International best practices suggest that sustainable pension systems require careful balancing of current obligations with long-term fiscal sustainability. Countries that have successfully managed pension transitions typically adopt phased approaches that gradually reduce reliance on unfunded schemes while ensuring equitable treatment of all beneficiaries. Nigeria’s selective approach to pension settlement appears to deviate from these established principles, potentially creating precedents that could complicate future reform efforts.

As lawmakers deliberate on this massive fiscal intervention, they must confront fundamental questions about fairness, sustainability, and the government’s obligations to all categories of retirees. 

The ₦758 billion pension bond, while potentially transformative for some beneficiaries, risks entrenching a system of pension apartheid that abandons the most vulnerable while providing comprehensive relief to the politically visible. The National Assembly’s approval should be conditional on binding commitments to address all pension obligations fairly, clear performance metrics for measuring success, and robust oversight mechanisms that prevent future exclusions.

Only through such comprehensive approaches can Nigeria build a pension system that truly serves all its citizens while maintaining fiscal responsibility. The current proposal, despite its unprecedented scale, leaves too many pensioners in limbo to be considered a complete solution to the nation’s pension crisis. The question remains whether lawmakers will demand inclusive reforms or allow this historic opportunity to perpetuate existing inequities in Nigeria’s treatment of its retired public servants.