Pension Harmonisation May Raise Liabilities But Boosts Retirees’ Incomes – PTAD

The Pension Transitional Arrangement Directorate (PTAD) has said its implementation of pension harmonisation for Defined Benefit Scheme (DBS) pensioners — which took effect in May 2026 — is expected to raise the federal government’s pension liabilities even as it lifts incomes for many retirees.

In a statement, PTAD said the move, approved by President Bola Tinubu in August 2025 as part of the agency’s 2026 pension budget, corrects long-standing structural disparities in the old pension system by computing pensions using the last salary structure at the DBS cut-off date rather than the salary at each retiree’s individual retirement date.

Executive secretary of PTAD, Tolulope Odunaiya described the policy as “a significant step toward ensuring a more equitable structure and restoring confidence in the administration of the Defined Benefit Pension Scheme.”

PTAD said the harmonisation ensures pensioners of similar ranks, grades and years of service receive equitable benefits regardless of retirement date, thereby boosting incomes for eligible retirees.

PTAD acknowledged the fiscal impact of the reform, noting that aligning past pensions to the final approved salary structure will increase the government’s overall pension obligations. The agency framed the additional cost as part of the federal government’s commitment to fairness, social justice and the welfare of retirees.

Odunaiya said “this intervention represents a significant step toward ensuring a more equitable structure and restoring confidence in the administration of the Defined Benefit Pension Scheme”.

She said the development represents government’s steadfast commitment to pensioners’ welfare, as well as its resolve to identify structural inequities and implement corrective measures that duly recognise and honour the contributions of DBS retirees.

Prior to the implementation, pensions were computed for pensioners based on the salary structure applicable at the time of their individual retirement from service.

With the pension harmonisation, the government said pensions are computed using the last salary structure at the cut-off date for the DBS pension. This ensures that DBS pensioners of similar ranks, grade levels, and years of service receive equitable pension benefits regardless of their retirement date.

The eligibility for pension harmonisation applies to pensioners who are purely federal pensioners, whose entire DBS pension obligation falls under federal government’s purview, state and federal share pensioners under parastatals pension department, defunct and transferred agencies pension department, and tertiary education and health pension department who initially served with the federal fovernment and subsequently transferred to state government MDAs.

It is also meant for pensioners on earlier salary structures whose pensions were hitherto calculated on salary structures predating the final approved Salary Structure.

The executive secretary reassured pensioners of the commitment to prioritizing their welfare through continuous collaboration with relevant government agencies to enhance their overall well-being.