Katsina moves to clear gratuity arrears, unveils new pension reform law

The Katsina State Government says it is finalising arrangements to settle outstanding gratuity arrears amounting to over ₦20 billion, in what officials describe as a major step toward restoring confidence in the state’s pension administration.

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The Chairman of the State and Local Government Pension and Gratuity Committee, Farouk Aminu, disclosed this on Friday while presenting the state’s newly enacted 2025 Pension Reform Law to journalists in Katsina.

Mr Aminu said the verification of liabilities accumulated between September 2023 and October 2025 is almost complete, adding that Governor Dikko Radda has pledged to release funds for the payment once the audit is concluded.

He noted that the government had earlier paid ₦23 billion to clear arrears owed between the fourth quarter of 2019 and August 2023—an intervention he described as a “turning point” in efforts to sanitise the pension system.

According to him, the latest commitment to offset an additional ₦20 billion shows the administration’s resolve to dismantle the backlog that has burdened retirees for years.

He added that the broader goal is to ensure that civil servants receive their gratuity within the same month of retirement, eliminating the long delays that have defined the system.

Highlights of the 2025 Pension Reform Law

Mr Aminu said the new law introduces a dual-structure contributory pension model designed to guarantee sustainable and timely payment of retirement and death benefits at both state and local government levels.

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Under the law, two systems will run concurrently: the Contributory Defined Benefits Scheme (CDBS) and the Pure Contributory Pension Scheme (CPS).

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He explained that existing pensioners and workers with five years or less before retirement will remain under the current defined benefits system to safeguard their accrued entitlements. Workers with more than five years to retirement will be migrated to the contributory scheme.

Under the CDBS, both the government and employees will contribute to a pooled fund to be managed by licensed Pension Fund Administrators (PFAs).

Retirement and death benefits will be paid directly from professionally managed assets rather than relying on irregular government releases.

For workers under the CPS, monthly contributions will be remitted into individual Retirement Savings Accounts, similar to the federal model but without the burden of accrued rights, since only employees with minimal liabilities are transitioning.

The reform mandates a 20 per cent combined monthly contribution from government and workers. Mr Aminu said the structure was designed to provide a stable funding base for the state’s pension obligations over the next three decades.