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<p>By<br />
Musa Usman</p><div class="TmCB1AGW" style="clear:both;float:left;width:100%;margin:0 0 20px 0;"><script async src="https://pagead2.googlesyndication.com/pagead/js/adsbygoogle.js"></script>

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<p>The current rule, which effectively restricts a retiree&#8217;s one-time lump sum pension withdrawal to about 25% of their total savings, is seriously flawed. This restriction, which arguably serves the financial interests of the Pension Fund Administrators (PFAs) more than the retirees&#8217; well-being, is pushing many former workers into hardship, poverty, and despair.</p>
<p>This rigid policy is completely out of touch with today&#8217;s financial realities. Given the high rates of inflation, increasing costs of living, and generally low salaries in the civil service, the current 25% limit is unfair and unrealistic. It severely prevents retirees from accessing the substantial capital they need for crucial, one-time expenses.</p>
<p>The government must urgently review this rule to properly balance the scheme’s stability with the retiree’s right to enough money for a respectable life after service.</p><div class="djQtU1TO" style="clear:both;float:left;width:100%;margin:0 0 20px 0;"><script async src="https://pagead2.googlesyndication.com/pagead/js/adsbygoogle.js"></script>

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<p>First, the feeling that it is &#8220;very unfair to deny one his rights after working for 35 years&#8221; is a valid moral and contractual complaint. The money in the Retirement Savings Account (RSA) isn&#8217;t a gift; it is deferred compensation—money the employee earned and was forced to save. After decades of service, a retiree should have a greater say in how their savings are used. Limiting access to a large portion of their own savings betrays the trust built up over their career, where many expected a significant capital injection upon retirement. Restricting this access feels like a punishment for faithfully contributing to the scheme.</p>
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<p>Furthermore, the government&#8217;s goal is to protect retirees, but the policy fails because Inflationary trends and high cost of living has made 25 percent not realistic looking at the meager amount of the total package of federal civil servants.</p>
<p>The devastating impact is best shown by a recent testimony from a retired university staff member:</p>
<p>STATE OF NIGERIAN RETIREES: WHAT A PITY?</p>
<p>&#8220;After serving my father&#8217;s land for a good 42 years in Ahmadu Bello University, Zaria and retired on 2nd February, 2025&#8230; my RSA balance is #18,749,837:40 and the whole of my Lump sum just stands at only #4,692,776:60.&#8221;</p>
<p>&#8220;My Lump sum cannot even take me home, talk less of buying, building a house or starting something for a living, what a nation? The PenCom and PFA&#8217;s are Sucking our blood&#8230; We are dying in the hands of these heartless people. May Allah bail us out from this injustice.&#8221; ð¢</p>
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<p>This sad example shows three problems: high inflation rapidly destroys the buying power of the entire RSA balance, making the final 25% lump sum &#8220;meager&#8221; and insufficient for basic post-retirement needs; 25% of an already small total balance even after 42 years is totally inadequate for major financial obligations, proven by the retiree’s distress that the money &#8220;cannot even take me home&#8221;; and most ironically, the government fears a large payout will lead to poverty, yet an inadequate lump sum forces retirees into immediate poverty by preventing them from making essential capital investments like securing a home.</p>
<p>Consequently, the main argument is that retirement requires large, one-time capital expenses which the small monthly pension cannot cover. The testimony confirms this dashed expectation: the inability to buy, build a house or to start something for a living. For most, the lump sum is the last and most critical money for finishing a personal home. As stated, Most civil Servants depend on their entitlements to build their houses and how could they do so with 25 percent?</p>
<p>Allowing a larger lump sum for housing is a much better form of social protection than forcing them to use a tiny monthly pension to cover rent. Crucially, the current rule fails to separate capital expenses like building a house or starting a business for extra income from recurrent expenses like food and utilities. The lump sum is necessary for capital expenses; the monthly pension is for recurrent ones.</p>
<p>Restricting the capital portion prevents the retiree from creating the secure foundation needed to lower their future recurrent costs.</p>
<p>Beyond individual hardship, the deep unhappiness with the current Contributory Pension Scheme (CPS) is now leading to organized resistance and fundamental challenges to the system’s legitimacy.</p>
<p>The retiree’s final warning to &#8220;tighten up your belt as this is just the beginning of the journey&#8221; shows a widespread feeling of being betrayed.</p>
<p>The highest-profile</p>
<p>challenge comes from the Nigeria Police Force, which has persistently demanded to leave the CPS due to the poor lump sum and low monthly payments. Other security agencies are also voicing similar demands, signaling a growing loss of confidence in the CPS from critical public sectors. These major complaints threaten the very survival and stability of the pension system. When key workers want to opt out, it proves a widespread loss of faith in the system&#8217;s ability to offer a dignified retirement.</p>
<p>Instead of a simple, restrictive limit, the government needs a smarter solution. They should consider increasing the lump sum access up to 50 percent.</p>
<p>This higher amount would give retirees a sense of worth, dignity, and the necessary capital to secure a home. The National Assembly and the Tinubu Administration must act immediately to stop the total rejection of the pension scheme.</p>
<p>Revisiting the current policy isn&#8217;t about promoting reckless spending; it&#8217;s about granting responsible access to a person&#8217;s life savings to meet the large, non-recurring financial needs critical for true security in retirement. Failure to act will not only trap a generation of retirees in poverty but will ultimately lead to the collapse of the Contributory Pension Scheme itself.</p>
<p>Musa Usman is a Retired federal civil servant, wrote this piece from Kaduna.</p>
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