President Bola Tinubu has requested the Senate’s approval for the issuance of a N757 billion Federal Government bond to settle outstanding pension liabilities accrued as of December 2023.
The request was contained in a letter addressed to the President of the Senate, Godswill Akpabio, which was read at plenary on Tuesday.
“I write to request the approval of the National Assembly for the issuance of a Federal Government of Nigeria bond in the domestic debt market by the Debt Management Office (DMO),” the President said.
The bond is intended to settle pension liabilities under the Contributory Pension Scheme (CPS) as of December 2023.
Tinubu explained that the Pension Reform Act 2014 mandated setting aside five per cent of the nation’s monthly wage bill to clear past pension liabilities before the commencement of the CPS.
However, due to revenue challenges, Nigeria has struggled to comply fully with this provision, leading to an accumulation of pension arrears.
The President described the proposed bond as a vital investment in human capital development, saying it will enable the Federal Government to meet its obligations under the CPS, restore confidence in the pension industry, and improve retirees’ welfare.
He added that settling pension arrears would help retirees meet basic needs such as medication, rent, school fees, and other family expenses, thereby improving their health and reducing premature deaths.
Tinubu also noted that clearing pension liabilities would boost productivity, improve morale among public servants, and demonstrate the government’s commitment to fulfilling pension obligations.
He further said the settlement could stimulate aggregate demand, spur economic growth, and enhance liquidity in the economy.
The President acknowledged that the bond issuance would increase Nigeria’s public debt stock and raise debt servicing costs.
He however, emphasised the importance of settling pension arrears to improve the welfare of retirees and stimulate economic growth.
The Senate will review the request and consider approving the bond issuance to enable the Federal Government to settle pension arrears and stimulate economic growth.
