Twenty -eight state governments across the federation, that have subscribed to the Contributory Pension Scheme (CPS), are owing a total of N626.81 billion in unpaid pensions and gratuities, data from the 2025 edition of BudgIT Foundation’s State of States report has shown.
This is as 25 States, including the Federal Capital Territory (FCT), have paid over N236.7 billion in pension contributions into the Retirement Savings Accounts (RSAs) of their respective workers in the last four years.
According to the BudgIT report, Rivers, Delta, and Akwa Ibom States emerged as the top three debtors in Nigeria’s widening pension crisis, with a combined liability exceeding N330 billion.
A breakdown of the report reveals that Rivers State leads the list with an estimated N120 billion in outstanding pension liabilities, primarily driven by recurrent expenditure pressures and wage obligations. Delta State follows closely, with approximately N110 billion in arrears, despite its status as one of the country’s leading oil-producing states and its robust monthly allocations.
Akwa Ibom State ranks third with approximately N100 billion in pension debt. BudgIT observed that, despite steady revenue inflows, the state’s long-term liabilities remain largely unmanaged.
In Anambra State, which boasts one of the strongest internally generated revenue bases in the South-East, pension arrears of approximately N95 billion persist, with analysts attributing this development to weak fiscal planning and misplaced spending priorities.
Ogun State rounds out the top five with N90 billion owed to retirees, an ironic twist for a state that prides itself on being an industrial and investment powerhouse.
The Pension Reforms Act (PRA) 2014 provides for employees to remit eight per cent of their salary, and employers are to contribute 10 per cent of their workers’ salary, resulting in a cumulative 18 per cent that should be remitted into the RSA of each worker every month.
The BudgIT report, however, reveals growing fiscal irresponsibility of sub-national governments, many of which continue to spend heavily on infrastructure and recurrent costs while neglecting the welfare of retired public servants.
BudgIT’s findings show that, despite increased federal allocations and modest improvements in internally generated revenue, most states have failed to address their mounting pension arrears, leaving thousands of retirees without the benefits they are due.
According to the civic data organisation, the N626.81 billion pension debt reflects a deeper financial strain across the states, compounded by falling federal transfers, surging inflation, and rising debt service obligations that continue to squeeze state budgets.
The N626.81 billion pension backlog across 28 states, as noted by BudgIT, mirrors deeper governance failures. Many state governments have failed to strike a balance between infrastructure ambitions and social obligations, leaving thousands of senior citizens in distress.
“While many states have slowed down on new borrowing, old liabilities, especially unpaid pensions and gratuities, are quietly piling up, threatening to erode fiscal sustainability and public trust,” the report warned.
BudgIT cautioned that the continued accumulation of pension arrears poses long-term fiscal and social risks, as delayed entitlements expose retirees to hardship and undermine the credibility of public institutions.
The organisation urged states to integrate pension repayments into their Medium-Term Expenditure Frameworks (MTEFs) rather than deferring them year after year. It also called for the publication of detailed arrears data to promote transparency and informed public engagement.
BudgIT further recommended that the federal government, development partners, and financial regulators support sub-national governments in designing sustainable frameworks for managing pension liabilities, warning that, failure to act could plunge more retirees into poverty and deepen Nigeria’s governance crisis.
Meanwhile, some of the 25 States including the Federal Capital Territory(FCT) who have enacted pension laws on the Contributory Pension Scheme (CPS), have paid N236.7billion pension contributions into the Retirement Savings Accounts(RSAs) of their respective workers in the last 4years, it was learnt.
The pension contributions, by design, are intended to ensure that every worker captured in the new pension scheme, known as the Contributory Pension Scheme (CPS), has a good retirement life, leveraging the cumulative monthly contributions made by both the worker and the employer while in active service.
However, States that have made most of these pension contributions for their workers, according to LEADERSHIP investigation, include: Lagos, FCT, Osun, Kaduna, Ekiti, Edo, Delta and Anambra.
Earlier at a forum in Ikeja, Lagos, recently, the director general, PenCom, Omolola Oloworaran said, the N236.7billion remitted occurred between January 2020 and the second quarter of 2024.
According to her, “based on our record, 25 States, including the FCT, have enacted pension laws on the CPS, while six are at the Bill stage. Six other States have adopted the Contributory Defined Benefits Scheme (CDBS), a hybrid of the CPS and DBS. However, only eight States are fully implementing the CPS, out of the 25 States that have enacted pension laws.”
Disclosing the benefits of adopting CPS to State governments, Oloworaran noted that one of the significant benefits of adopting the CPS is access to accumulated pension funds for infrastructural development through the issuance of state bonds.
She disclosed that five States, including Lagos, Niger, Osun, Ekiti, and Delta States, have successfully leveraged the platform of CPS to issue state bonds that were subscribed by pension funds. Notably, the Lekki-Ikoyi Bridge in Lagos was partly financed by pension funds, she said.
Promising that the commission, under her leadership, is committed to ensuring that all retirees, from both the public and private sectors, receive their retirement benefits as and when due, she added that the commission shall focus on 26 States with CPS or CDBS laws, but are yet to commence implementation.
“Our focus will be to constructively engage these States in a sustained manner and work towards expanding the coverage of CPS at the subnational level. We will also intensify our efforts with relevant State Government Agencies to resolve the backlog in accrued rights payments to CPS retirees. In addition, we are working to ensure that pensioners under the CPS and other pension arrangements benefit from pension increments provided for in the Constitution of the Federal Republic of Nigeria, 1999 (as amended),” she added.
She proposed that States adopt the CPS for new employees and/or those employed for 10 years or less, as this would substantially reduce the burden of accrued pension rights payable upon retirement under the CPS.
Saying the Forum was last held in the 4th quarter of 2019, she was delighted to reconvene the Forum, promising continuity in the organisation of the quarterly consultative forum.
