Nigeria’s pension and gratuity obligations continue to expose the fragility of state finances, with only eight out of 36 states free of arrears, according to BudgIT’s 2024 analysis. The remaining 28 states collectively owe retirees N626.81 billion, reflecting deep-seated fiscal and governance challenges.
The eight states that have managed to stay current are: Akwa Ibom, Abia, Ebonyi, Borno, Nasarawa, Kebbi, Jigawa, and Kano. These states demonstrate disciplined fiscal planning, ensuring that revenue inflows from Federation Account Allocation Committee(FAAC), internally generated revenue (IGR), and other sources are adequately aligned with statutory obligations to retirees.
High arrears across key economies
States with significant economic activity continue to struggle.
Ogun and Edo States have arrears of N81.54 billion and N57.92 billion, respectively. In the North West, Kaduna tops the list with N83.29 billion in unpaid pensions. In the North East, Adamawa and Bauchi owe N27.50 billion and N31.21 billion, respectively. Analysts note that even states with strong internal revenues such as Lagos (N1.26 trillion IGR), Ogun (N194.93 billion), Enugu (N180.5 billion), Delta (N164.58 billion), and Edo (N88.21 billion) have not escaped the pension debt crisis.
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In Ogun State, Waidi Oloyede, chairman of the Nigeria Union of Pensioners (NUP), lamented that many retirees have been “waiting for years for the promised adjustments,” adding that “pensioners are facing severe hardship, with some dying before getting what they rightfully earned.”
The arrears reflect fiscal misalignment, rather than a lack of resources, as revenue streams are often diverted to other expenditures or debt servicing.
In the North West, Kaduna leads with N83.29 billion in unpaid pensions, and in the North East, Adamawa and Bauchi carry N27.50 billion and N31.21 billion burden, respectively. Analysts note that even states generating substantial internal revenue, such as Lagos with N1.26 trillion IGR, Ogun (N194.93 billion), Enugu (N180.5 billion), Delta (N164.58 billion), and Edo (N88.21 billion IGR) are not immune.
In Ogun State, Waidi Oloyede, chairman of the Nigeria Union of Pensioners (NUP), lamented that many retirees have been “waiting for years for the promised adjustments,” adding that “pensioners are facing severe hardship, with some dying before getting what they rightfully earned.”
The arrears reflect fiscal misalignment rather than a lack of resources, as revenue streams are often diverted to other expenditures or debt servicing.
Regional disparities deepen poverty
The regional distribution of arrears highlights growing inequality. In the South West, arrears total N138.33 billion. In the South East, arrears tstand at N50.44 billion, rising to N87.18 billion in South South.
In the North West, arrears sum up to N97.95 billion. In the North Central, arrears stand at N154.26 billion, falling to N98.72 billion in the North East. These figures show that retirees in regions with higher arrears face prolonged financial hardship, reducing household spending and economic activity and exacerbating regional poverty.
The Nigeria Union of Pensioners (NUP) warned that many retirees will no longer support governors who have failed to clear pension and gratuity backlogs. “We won’t vote for governors owing us pension arrears and gratuity,” the NUP said in a statement, adding that governments have turned “the right to a pension into a privilege.”
Revenue capacity vs. Fiscal inaction
Across regions, the internally generated revenue of most states far exceeds the arrears they owe. In the South West, total IGR is roughly N1.67 trillion, yet arrears sum up to only N138.33 billion. In the South South, states generate over N442 billion in IGR while arrears are N87.18 billion. Even in the North West, states could clear arrears of N97.95 billion from a combined IGR of N255.51 billion.
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Analysts say this is not a resource problem; it is a governance problem. Despite having the means to pay, decades of service remain uncompensated, leaving retirees in prolonged financial distress. Analysts warn that such inaction compounds poverty, erodes trust in government, and turns income earned over a lifetime into empty promises.
The human cost
Behind the numbers are millions of retirees depending on timely payments to sustain their livelihoods.
“Governments that preach poverty alleviation are often the same ones compounding the poverty of retirees, even after decades of service to the state,” an analyst said. “It is truly pathetic. Incomes earned over years are withheld when it is most needed, leaving retirees to struggle at a time they should be financially secure.”
Delays exacerbate poverty, reduce household spending, and undermine confidence in public institutions. Experts warn that continued arrears risk social instability, particularly in states where pension payments constitute a major portion of household income.
A call for fiscal discipline
The BudgIT data underscores the urgent need for Nigerian states to prioritise pensions and gratuities. Beyond revenue generation, there must be a culture of disciplined allocation, transparent accounting, and proactive arrears clearance, analysts say.
Omolola Oloworaran, director-general of the National Pension Commission (PenCom), recently confirmed that a N758 billion federal bond was approved to clear accumulated arrears under the Contributory Pension Scheme. She noted that “clearing these arrears is essential to restore trust in the pension system and ensure retirees receive what they deserve.”
Failure to act will keep the majority of retirees in financial uncertainty, even as states pursue ambitious infrastructure and capital projects. Only eight states are currently doing things right. For the remaining 28, the lesson is clear: fiscal responsibility is not optional, it is essential for social stability, public trust, and preventing further regional poverty.