FG may require additional N7trn annually if Police Exit Contributory Pension – PenOp

Pension industry operators have warned that the Federal Government could face a severe fiscal crisis and may require an additional N7 trillion annually in budgetary allocations if the Nigeria Police Force (NPF) exits the Contributory Pension Scheme (CPS). The warning follows the passage of the Nigeria Police Force Pension Board Bill by the Senate in […]

Pension industry operators have warned that the Federal Government could face a severe fiscal crisis and may require an additional N7 trillion annually in budgetary allocations if the Nigeria Police Force (NPF) exits the Contributory Pension Scheme (CPS).

The warning follows the passage of the Nigeria Police Force Pension Board Bill by the Senate in December 2025, which, if assented to by President Bola Tinubu, will establish a standalone pension board for the police and formally exempt the Force from the CPS.

The Bill was earlier passed by the House of Representatives in October 2025, following weeks of protests by retired police officers at the National Assembly over pension delays and poor benefits.

Chairman of the House Committee on Police Affairs, Hon. Abubakar Makki Yalleman, had said the bill was a response to long-standing grievances within the Force.

“We understand they want to be on their own, just like the military, the DSS and others,” he said.

Similarly, Chairman of the House Committee on Pensions, Hon. Hussein Jalo, confirmed that the bill had been transmitted to the Senate for concurrence, where it later scaled third reading in December after clause-by-clause consideration.

Daily Trust gathered that the Bill may have since been transmitted to the President for assent.

 

N7trn Fiscal Shock

Reacting to the development, the Pension Fund Operators Association of Nigeria (PenOp) said the exit of the police from the CPS would impose an “unmanageable and unsustainable” burden on government finances.

According to PenOp, moving the police from a pre-funded contributory scheme to a Defined Benefit Scheme (DBS) would make the government fully responsible for both past and future pension liabilities of approximately 350,000 police officers.

“Current actuarial estimates indicate that this decision would generate liabilities in excess of N7 trillion. This reflects the obligation to fund full past-service and future-service benefits for the police workforce,” the operators said.

They noted that in 2023, total federal budgetary provision for pensions, gratuities and retirees’ benefits stood at N854.8 billion, while police pensions specifically received just N8.9 billion.

“The gap between N8.9 billion and a N7 trillion liability reveals a fiscal impossibility. Bridging it would require either an unprecedented cash injection or permanent massive annual allocations that would divert resources from healthcare, education, infrastructure and security operations,” PenOp warned.

They added that such an unfunded liability would weaken Nigeria’s fiscal position, undermine sustainability efforts and increase sovereign debt risk at a time when the country already has a high debt-to-revenue ratio.

 

Not All Officers Want Exit – PenOp

PenOp also recalled that previous government reviews concluded that the NPF should remain under the CPS, leading to the establishment of NPF Pensions Limited.

They argued that the continued decision of many serving officers to retain their Retirement Savings Accounts (RSAs) with existing Pension Fund Administrators suggests that the agitation for exit does not reflect a universal position within the Force.

The operators further warned that exiting the CPS would run contrary to global pension reforms.

“Countries across Africa and advanced economies such as the United States and the United Kingdom have moved away from unsustainable defined benefit models toward contributory systems. Reversing course now would isolate Nigeria as a policy outlier and repudiate its own reform logic,” they said.

 

Call for Sustainable Solutions

Rather than abandoning the CPS, PenOp urged the government to strengthen existing structures.

“The ethical and responsible response to police welfare concerns is not to revive an unsustainable promise machine, but to fully deploy the tools already embedded in the Pension Reform Act and the Constitution. Increasing contributions, paying gratuities and implementing periodic pension reviews can deliver better outcomes without destabilising public finances,” the association stated.