Ogun APB Implementation: Creating Local Economic Stimulus

Femi Ogbonnikan

​​A new era has dawned for retirees in Ogun State Government ’s civil and public service. With the full implementation of the Additional Pension Benefit (APB), pensioners are set to receive higher gratuities while escaping the payment delays that have historically plagued their monthly allowances.
​The Additional Pension Benefit (APB) is a reform initiative by President Bola Ahmed Tinubu. Under the policy, the Federal Government provides gratuity equivalent to 100 percent of a retiree’s final annual salary. Ogun State government, however, opted for a higher benchmark – a minimum of 116 percent, rising to 280 percent based on years of service.
This shift in pension policy marks a significant departure from the traditional Defined Benefit struggles that have long plagued the public sector. By setting a benchmark that exceeds the Federal Government’s standard, Ogun State is effectively creating a more robust social safety net for its aging workforce.
​The Additional Pension Benefit (APB) serves as a strategic bridge to ensure that the transition from active service to retirement doesn’t result in a sudden collapse of purchasing power.
​The implementation in Ogun State introduces a tiered system that rewards long-term loyalty and service.
​The most critical aspect of this reform isn’t just the higher percentage; it is the structural change to the payment timeline ending nightmare scenario.
​Historically, pensioners faced arrears cycles where monthly allowances were delayed by months or years. The APB framework is designed to automate these disbursements. Apart from the inflation buffer effect, pegging the gratuity to a higher percentage of the final salary (up to 280 percent provides a larger capital sum that can be reinvested or used to clear personal liabilities immediately upon retirement.
​For the state, this requires a more disciplined approach to the Pension Fund Administration, ensuring that the Gateway State remains a leader in civil service welfare. ​This move aligns with the current national trend of re-evaluating labour compensation in the wake of subsidy removals and currency fluctuations. By increasing the exit package for civil servants, the government is essentially injecting liquidity into the local economy through the hands of retirees.
​The implementation of the Additional Pension Benefit (APB) is more than just a welfare increase; it is a strategic fiscal pivot within the N1.67 trillion Budget of Sustainable Legacy for 2026.
​By shifting to this model, the state is addressing the friction between massive infrastructure commitments and long-standing personnel liabilities.​By providing the APB as a one-off payment (116 percent to 280 percent, the state avoids the compounding arrears that previously choked the recurrent budget.
​Since the APB acts as the primary gratuity, retirees no longer need to withdraw 25 percent of their Retirement Savings Account (RSA). This keeps more private capital within the Pension Fund Administrators (PFAs), which can then be reinvested in state-backed infrastructure bonds.
​To support these long-term obligations, the House of Assembly recently approved a N300 billion funding request specifically aimed at partial budget funding and long-term pension obligations.
​​For a state positioning itself as Nigeria’s industrial hub, this reform has two secondary benefits:
​Consumer Spending and labour liability. Injecting up to 280 percent of an annual salary into the hands of thousands of retirees creates an immediate local economic stimulus.
​It also provides a clear, lucrative exit path, ensuring the machinery of government remains functional for industrial partners.
Governor Dapo Abiodun gave the details of the new policy implementation during the official presentation of cheques to retirees at the Oba’s Complex, Okemosan, Abeokuta, recently.
The Secretary to the State Government (SSG), Mr Tokunbo Talabi, who represented the governor, said between 70 and 80 per cent of retiring workers would receive higher benefits under the new arrangement than what was previously obtainable as gratuity.
“What this means is that, unlike in the past when gratuity payments were delayed, retirees will now receive improved and timely benefits. Our minimum is 116 per cent, going up to 280 per cent, which is significantly higher than the 100 per cent benchmark,” Governor Abiodun said.

He noted that his administration inherited substantial pension and gratuity liabilities but has since taken deliberate steps to address them comprehensively. According to him, beyond settling outstanding obligations, the government ensured that retirees received returns on delayed remittances, thereby enhancing the value of their entitlements. He further explained that under the APB framework, retirees now receive a one-off lump sum as Additional Pension Benefit, while their full pension contributions remain intact with Pension Fund Administrators (PFAs), resulting in improved monthly pension payments.
“Previously, about 25 per cent of total pension savings would be taken as a lump sum. Now, that deduction is no longer necessary, as the APB serves as the lump sum, leaving the full contributions to generate stronger monthly pension payments,” he added.
The new policy implementation, he said, underscores the administration’s commitment to retirees’ welfare, describing their well-being as a moral obligation.
The Head of Service (HoS, Mr Kehinde Onasanya, said the initiative would bridge the gap between the old Defined Benefit Scheme and the Contributory Pension Scheme (CPS), ensuring retirees receive immediate financial support upon exit from service.
The Chief Economic Adviser and Commissioner for Finance, Mr Dapo Okubadejo, on his part, traced the evolution of pension administration in the state, noting that the CPS, introduced in 2008, faced funding challenges that eroded public trust.
He revealed that pension liabilities under the old Defined Benefit Scheme rose sharply—from ₦2 billion for about 8,198 retirees in 2011 to over ₦20 billion for more than 16,000 retirees by 2025—highlighting the unsustainability of the previous system.
Okubadejo added that the state inherited over ₦42 billion in unpaid pension liabilities as of 2019 but has since taken decisive steps to clear the backlog and restore confidence.
Labour leaders, including Comrades Ahmed Benco of the Nigeria Labour Congress (NLC) and Akeem Lasisi of the Trade Union Congress (TUC), commended the initiative, describing it as the first of its kind in the country and a model for other states.
The initiative has been applauded by the stakeholders within the organised labour. The Chairman of the Nigeria Union of Pensioners, Mr Waheed Oloyede, lauded the programme as a major step toward improving retirees’ welfare, while calling for transparency in its implementation.
Representatives of Pension Fund Administrators and the National Pension Commission also described the scheme as a bold and innovative reform that strengthens retirement security.
At the event, cheques ranging from ₦17 million to ₦22 million were presented to 111 beneficiaries in the first phase of disbursement and the computation is based on agreed rates applied on Total Annual Emolument ( TAE)
The APB initiative follows concerns raised by stakeholders after the full implementation of the CPS in Ogun State on July 2, 2025. It was subsequently adopted after extensive consultations involving organised labour, pension administrators, and government officials.
Stakeholders have since described the initiative as a sustainable mechanism to bridge gaps between the CPS and the former Defined Benefit Scheme, particularly in addressing gratuity-related concerns.
The Ogun State Government has also recorded significant interventions in the pension sector, including ₦26.35 billion paid to offset outstanding gratuity liabilities, ₦5.89 billion remitted as arrears of CPS deductions and accrued returns, ₦500 million paid as death benefits, and ₦3.19 billion in CPS remittances as of January 2026.

*Ogbonnikan is a Senior Special Assistant (SSA) to the Ogun State Governor on Media