In April 2025, the Katsina State Government officially introduced a new Contributory Pension Scheme (CPS). This move marks a major shift from the old pension system, aiming to ensure more sustainable and timely retirement benefits for workers across the state’s civil service.
But what exactly is this new scheme about? How does it affect workers? And why is it important? Let’s break it down.
What is a Contributory Pension Scheme?
A Contributory Pension Scheme is a retirement plan where both the employee and the employer contribute a certain percentage of the worker’s salary into a Retirement Savings Account (RSA). When the worker retires, the accumulated savings are used to pay their pension.
This is different from the old Defined Benefit Scheme where only the government funded pensions — often leading to backlogs and delayed payments when there were not enough funds.
Key Features of the New Katsina State CPS
1. Joint Contributions
Under the new system, both the state government (employer) and the employee make monthly contributions. Typically, the employee contributes around 8% of their salary, while the employer adds about 10%.
2. Personal Retirement Savings Account (RSA)
Each worker now has a personal pension account managed by a licensed Pension Fund Administrator (PFA). The money saved belongs to the worker and can be monitored over time.
3. Portability and Transparency
Workers can track their pension savings online and can even transfer their account to another PFA if they wish. This brings more transparency and puts the worker in control.
4. Private Sector Involvement
The management of the pension funds is handled by private Pension Fund Administrators (PFAs), regulated by the National Pension Commission (PenCom). This professional management ensures the safety and growth of the funds.
5. Death-in-Service Benefits
If a worker dies before retirement, their family or nominated next of kin will receive the benefits of the savings, plus an insurance cover.
Why is This Scheme Important?
Guaranteed Pension Payments: With regular contributions, pensioners can be sure of receiving their entitlements without long delays.
Financial Discipline: Contributions are deducted automatically, ensuring that funds are available when needed at retirement.
Reduced Burden on Government: Instead of relying solely on unpredictable state budgets, the funds are already saved up in advance.
Empowerment of Workers: Workers now have more ownership over their retirement planning.
My understanding is that if the state government continues with the old scheme, there may come a time when the burden will be too heavy for it to shoulder. When that happens, it won't be able to pay not only the gratuities but the pensions as well. This danger is not theoretical — it is already happening in several states across the country.
For example:
Benue State has been struggling for years to pay gratuities and pensions, with some retirees reportedly owed over 30 months of pension arrears.
Kogi State pensioners have frequently protested over unpaid gratuities and pensions running into billions of naira.
Abia State has also faced major pension crises, with many retirees reportedly unpaid for over 40 months.
Even in Imo State and Ogun State, retirees have staged multiple demonstrations demanding settlement of pension arrears and gratuities.
Even here in Katsina, you are witnesses to how the current government of Dikko Umaru Radda is struggling to offset the huge pension gratuities it inherited from the previous government. According to reports, Governor Radda has already paid over ₦13.5 in gratuities owed to 2,313 retirees in the state and local government services since the inception of his administration. This payment is part of an approved total of ₦24 billion earmarked for outstanding gratuities to both state and local government retirees.
Who is Affected?
The new Katsina State CPS covers:
All new employees joining the state civil service after the scheme's start date.
Existing workers may transition into the scheme, depending on their service years and agreements with the government.
Retirees who completed service under the old system (Defined Benefits) will continue to be paid by the state through the traditional pension process.
Conclusion
The Katsina State Contributory Pension Scheme is a progressive step toward solving the pension challenges faced by the state. While adjusting to a new system may take some time, the benefits — financial security, transparency, and dignity in retirement — make it a worthy reform for workers and future pensioners.
As the scheme rolls out, it’s important for all workers to stay informed, register with approved PFAs, and keep track of their Retirement Savings Accounts.
A better retirement starts with better planning — and with the new CPS, Katsina is paving the way.
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