TUE MAY 27 2025-theGBJournal| President Bola Ahmed Tinubu on Tuesday, sought the National Assembly’s approval for the Debt Management Office (DMO) to issue Federal Government Bonds (FGN Bonds) to settle outstanding pension liabilities, under the contributory pension scheme.
The outstanding pension liabilities totals N757.9 billion as of December 2023.
The Senate President, Senator Goodswill Akpabio read the President’s letter requesting the approval.
The President invited the Senate to note that the federal government has not been complying with the implantation of the provisions as spelt out by the pension reform act (PRA) 2014 over the years due to the revenue challenges leading to accumulation of pension arrears with the attendant hardship to retirees.
The PRA mandates the Federal Government of Nigeria to set aside 5% of its monthly way bill into redemption fund to settle such past pension liabilities.
”To settle the accrued N757.9 billion pension liabilities, as of December 2023, the government has decided to raise funds through the issuance of the FGN Bonds in the domestic debt market,” the President said.
President Tinubu noted also, that the proposed FGN Bonds to settle the outstanding liabilities was approved by the Federal Executive Council (FEC) in its meeting held February 4th 2025.
”This request is pursuant to the provisions of section 44 subsection 1,2 of the Fiscal Responsibility Act 2007, which requires the approval of the National Assembly for all new borrowings by the Federal Government of Nigeria,” President Tinubu added.
According to the President, since the borrowing is for the settlement of the federal government of Nigeria’s pension obligations to retirees, it is an essential investment in human capital development, which is allowed under the Fiscal Responsibility Act 2007.
The President suggested that the capital raise and settlement of the pension arrears will help restore confidence in the pension industry, bring positive welfare effect on the retirees, as this will enable them to meet their basic needs. This will equally improve their health and avoid untimely deaths of the retirees.
”It has potential to contribute to productivity and morals of public servants as this will assure them of the federal government’s commitment to meeting pension obligations. It also has the potential of increasing aggregate demand economic growth because it will enhance liquidity in the economy.”
The President warned however, that the move could lead to increase in both public debt stock and debt service for the federal government.
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President Bola Ahmed Tinubu on Tuesday, sought the National Assembly’s approval for the Debt Management Office (DMO) to issue Federal Government Bonds (FGN Bonds)to settle outstanding pension liabilities
