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Gratuity payment in the private sector not cancelled by CPS, says ex-PenCom board member


Oct 28, 2021
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Ivor Takor, a former board member of the National Pension Commission, PenCom, and Executive Director of the Centre For Pension Rights Advocacy, CPRA, has urged firms to pay gratuities to their employees, claiming that the Pension Reform Act, PRA, does not prohibit them.

Takor stated there was a link between social protection and social advancement during a presentation at the Nigeria Labour Congress’s Social Protection Cover roundtable.

“Retirees were given gratuity under the former Defined Benefits Scheme or DBS.” Gratuity is a one-time payment made by the employer to the employee. Section 7(1)(a) of the Contributory Pension Scheme (CPS) allows a Lump Sum to be withdrawn from the total amount credited in the contributor’s RSA.

“In the private sector, gratuity was a product of collective bargaining. Employers have stopped paying gratuity to their retiring employees, saying that gratuity is not covered by the CPS.

“Employers should be required to pay gratuity in the next revision of the PRA 2014. Pension payments should be made with the credit in the RSA. Gratuity was not eliminated by pension reforms.” he stressed.

“Section 89(2) authorizes the deployment of a percentage of pension asset in an RSA towards payment of an equity contribution for the payment of a home mortgage by the holder of the RSA” he noted

“PenCom should collaborate with the Federal Mortgage Bank of Nigeria to figure out how to put this provision into action so that workers may get cheap homes. The FMBN’s relationship with private housing developers is unable to provide workers with affordable accommodation. The costs of such homes are well beyond the means of employees, and they are being built with their help. What this means is that workers contribute while non-contributors profit.


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