By David Akinmola
The National Bureau of Statistics (NBS) has said that no fewer than 26.3 per cent of Nigerian workers have a pension plan and health insurance policy across the country in 2023.
A pension plan is an employee benefit that requires an employer to contribute to a pool of funds set aside for a worker’s future retirement benefit while Health insurance is a type of contract in which a company agrees to pay some of a consumer’s medical expenses in return for payment of a monthly premium.
This was revealed by the latest Nigeria Labour Force study published by the NBS
, saying that Zamfara state in the Northwest had recorded the highest number of employees with health insurance and pension at 65 per cent while Abia had the lowest number of wage employees with health insurance and pension plan at just 3.9 per cent.
The report also stated that percentage of employees entitled to either pension or health insurance schemes in Nigeria accounted for 26.3 per cent.
Zamfara state had the highest (65.9%) while Abia had the lowest, 3.9 per cent among wage employed.”
The low number of employees with pension and health insurance plans stems from the high number of informal sector workers in Nigeria.
According to the study, about 92 per cent of Nigeria’s employed population is engaged in informal employment.
The informal sector consists of businesses defined by open entry and exit, complete market knowledge, and market forces operating without formal regulations, like a competitive market.
These enterprises typically lack formal organizational structures, experience low and inconsistent earnings, face business insecurity, and do not offer social benefits like pensions for employers or employees.
According to the International Monetary Fund (IMF), reports recently said that Nigeria’s informal sector contributed 57.7 per cent to the country’s GDP in 2022, highlighting its significant role in the economy.
However, millions of Nigerians in this sector remain excluded from traditional pension systems, leaving them vulnerable to poverty in retirement.
Health insurance, pension plan in Nigeria
Employee benefits like health insurance, pensions, yearly leave, and work-life balance initiatives play a crucial role in enhancing job satisfaction, which can lead to higher productivity and employee loyalty.
The Pension Reform Act mandates that employers with at least 15 employees must participate in a contributory pension scheme. Under this scheme, employers are required to contribute a minimum of 10 per cent of an employee’s monthly salary, while employees contribute up to 8 per cent.
Similarly, the National Health Insurance Authority Act requires health insurance for all employees residing in Nigeria. Employers with more than five staff members must enroll in a health insurance scheme, ensuring contributions are made to the public health insurance scheme of the state where they operate. Alternatively, employers can opt to provide private health insurance for their employees under the same act.
However, enrolment in health insurance has been low when compared to the total population as around 18.7 million people are enrolled according to the National Health Insurance Agency (NHIA).
