FG Begins Payment of N18bn Severance Benefits to Defunct Nigeria Airways Workers After 22 Years

Pays additional N1.1bn exit benefits to 175 civil service retirees  Earmarks N32.9bn for 2026

Ndubuisi Francis and James Emejo in Abuja

The federal government yesterday announced the commencement of payment of N18 billion, being outstanding severance benefits to 2,700 ex-workers of the defunct national air carrier, Nigeria Airways.
This comes as the National Pension Commission (PenCom) yesterday also disclosed that payment of additional exit benefits to retiring civil servants had commenced with N1.1 billion already disbursed to 175 retirees who exited the Federal Public Service between January 1 and August 31, 2026.

The airline was liquidated in 2004 by the administration of former President Olusegun Obasanjo contrary to the recommendation of the International Finance Corporation (IFC), the private sector arm of the World Bank Group for a privatisation option.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele who briefed journalists in Abuja, disclosed that 2,100 former employees had been paid.

Another 600 beneficiaries in batches eight and nine had been cleared for payment, he said, adding that “altogether, this represents N18 billion in benefits for 2,700 former workers.”
The minister explained that payments were being made in batches to avoid already verified beneficiaries to continue waiting while outstanding claims were being validated.
The benefits, he added, covered different categories of former Nigeria Airways employees, devoid of distinction between junior and senior workers.

On beneficiaries who died before receiving their entitlements, the minister said payments would be made to their documented next of kin or other beneficiaries after the required legal processes had been completed.
According to Oyedele, some of the affected workers were already old while waiting for their benefits, while others died, leaving their families to pursue the outstanding entitlements.

He stated, “For more than two decades, following the liquidation of Nigeria Airways, many former employees have waited for their outstanding severance benefits. Some have grown old waiting. Some have sadly passed away, leaving their families to pursue what was legitimately due to them.”

The minister attributed the payment to a directive by President Bola Ahmed Tinubu to resolve the long-standing obligation.
He noted that although the severance benefits could not compensate for the over two decades-long waiting endured by the beneficiaries, the federal government considered it necessary to resolve inherited obligations rather than allow them to linger.
“We recognise that no payment today can fully compensate for more than two decades of waiting, but it is important that government confronts these long-standing obligations rather than allowing them to remain unresolved for another generation,” he said.

The minister apologised to the former employees of the defunct Air carrier for the long delay before their entitlements were settled, noting that the payments were entitlements rather than favours from the government.
He further explained that the settlement was part of the government’s broader efforts to clear verified inherited obligations, including outstanding payments to pensioners and indigenous contractors.

Oyedele stated that the payment to the defunct airline employees was preceded by extensive verification, including biometric capture and validation of personal and banking information, to prevent fraudulent claims.
According to him, further verification would be undertaken to address cases involving outdated information, incorrect bank details and deceased beneficiaries who’s next of kin or estates were required to complete the relevant processes.

But the minister noted that the government was settling the obligations based on the amounts documented and verified, in response to a question on whether or not the payments had been adjusted to factor in the current inflation after over 20 years.
Inflation, he admitted, had substantially shrunk the value of money over the period, but explained that there was no provision for inflationary adjustments in the settlement.

On indigenous contractors, he also disclosed that the federal government had paid outstanding obligations to over 12,000 of them as part of efforts to clear accumulated debts.
The government, he disclosed, initially prioritised smaller contractors owed N50 million or less before those with verified claims of up to N100 million.

Larger claims running into billions of naira could be addressed separately through negotiations and instruments such as promissory notes, he stated, adding that the approach was designed to prioritise small businesses that required the payments to meet salaries and other immediate obligations.

He warned contractors against paying commissions or inducements to government officials to facilitate payment of verified claims, describing such demands as illegal.
The minister said efforts were being made by the government to prevent another accumulation of unpaid obligations by making the budget more realistic and ensuring that capital expenditure commitments were backed by identifiable funding sources.

In another development, the payment by PenCom, being made under the newly introduced federal government Exit Benefit Scheme (EBS), represented an additional layer of financial support for retirees, separate from their pension entitlements under the Contributory Pension Scheme (CPS).

In a statement, the commission noted that under the scheme approved by the Federal Executive Council (FEC) and effective from January 1, 2026, federal civil servants who have put in at least 10 years of service are entitled to an exit benefit equivalent to 100 per cent of their total annual emolument at retirement.

The commencement of the payments marked a significant development in the federal government’s efforts to strengthen retirement benefits and provide retiring workers with additional financial resources beyond the balances accumulated in their Retirement Savings Accounts (RSAs).

The federal government had provided N32.90 billion in the 2026 Appropriation for the implementation of the scheme, while N12.3 billion had so far been released into a dedicated Exit Benefit Scheme Account domiciled with the Central Bank of Nigeria (CBN), PenCom explained.

The commission which is supporting the implementation, is working with the Office of the Head of the Civil Service of the Federation (OHCSF), the Office of the Accountant General of the Federation (OAGF), Pension Fund Administrators (PFAs) and other stakeholders to ensure the benefits are processed and paid to eligible retirees.

The scheme is designed to complement, rather than replace, existing pension benefits.

Consequently, payment of the exit benefit does not affect the normal retirement benefits available to beneficiaries from their RSAs under the CPS.

According to PenCom, the payment process begins with the retiree submitting relevant documentation, including a clearance letter and recent payslips, to the PFA managing his or her RSA.

The PFA is responsible for verifying the retiree’s records before forwarding the relevant information to PenCom for further validation and approval.

Following approval, the exit benefit is credited to the retiree’s RSA through the PFA. The PFA subsequently transfers the entire approved amount to the retiree’s designated salary bank account.

The federal government described the initiative as an important intervention designed to provide greater financial security to workers at retirement, particularly at a point when they are transitioning from active employment to post-service life.

The maiden disbursement to 175 retirees effectively signals the commencement of the scheme for eligible retirees of Treasury-funded Ministries, Departments and Agencies (MDAs).

Going forward, federal civil servants retiring from Treasury-funded MDAs who meet the stipulated conditions will qualify for the additional exit benefit equivalent to 100 per cent of their total annual emolument.

The initiative also places the federal government among employers taking deliberate steps to provide benefits beyond workers’ accumulated pension savings, with the potential to serve as a model for other employers seeking to improve retirement outcomes for their workforce.

PenCom said it remained committed to working with the relevant government institutions and PFAs to ensure the smooth administration of the scheme and timely payment of benefits to eligible retirees.

The commission stressed the importance of effective coordination among the participating institutions in ensuring that retirees receive the additional benefits without unnecessary delays.