The National Pension Commission (PenCom) has revealed plans to extend pension coverage to over 2.2 million Nigerians in the informal sector of the economy which creates about 80 per cent of jobs.
The commission revealed this on the sidelines of the maiden Micro Pension Open Day, organised by the Pension Operators Association of Nigeria (PenOp) with the theme: “Micro Pension – Challenges, Prospects for Growth and Deepening Financial Inclusion in Nigeria.” held in Lagos.
Micro Pension Plan refers to an arrangement under the Contributory Pension Scheme (CPS) that allows the self-employed and persons working in organisations with less than three (3) employees to make financial contributions towards the provision of pension at their retirement or incapacitation.
Speaking on the strategy to attract the 2.2 million participants into the scheme from the informal sector of the economy, the Head, of the Micro Pension Department, PenCom, Dauda Ahmed, said as part of incentives to embrace micro pension, the commission is working toward adopting a minimum health insurance for eligible MPP participants.
Ahmed also stated that the commission is also engaging with labour unions, trade associations, and several groups on embracing the scheme in the country.
He said currently MPP contributions as of May this year stood at N435.61 million from 97,591 participants registered, while the total contingent withdrawal by 150 Micro Pension Contributors (MPC) as of the month under review stood at N30.24 million, and the commission recorded N6.51 million as the amount converted by 581 Retirement Savings Accounts (RSAs) holders, under the informal sector to RSA’s under the formal sector.
Speaking on the challenges to implementation of the plan, Ahmed said; lack of awareness, mistrust about the pension system, absence of appropriate incentives, and lack of financial literacy, noting that the Pension Fund Administrators (PFAs) based MPP on short-term perspectives, especially in terms of financial benefits and the perceived associated cost.
However, he blamed the PFAs for poor service delivery, an inadequate awareness campaign for the product, and slow adoption of shared services arrangements, identifying other factors impeding the implementation of the MPP as weak economic indices, inflation, and increased poverty level.
Earlier, at the programme, Chief Executive Officer, PenOp, Oguche Agudah, charged the informal sector workers to visualise how their needs would be met in the next 20 to 30 years without a pension plan.
Agudah said the PFAs were concerned about improving the micro pension penetration in Nigeria, noting that the country has the largest informal sectors which are not covered by any form of formal pension.
“We, in the pension industry, work to get as many informal sector workers as possible on a pension scheme.
“Those within a structured organisation or who employ less than three persons and youths growing the informal gig economy; starting businesses on their laptop without any office, yet earning decently.
“We are passionate about micro pensions, as today’s event revolves around the audacious industrial goal to engage as many informal sector workers as possible, to sign up for the scheme for the benefit of Nigerians,” he said.
Also speaking at the event, Head of the Financial Inclusion Department of the Central Bank of Nigeria (CBN) Paul Oluikpe, urged industry stakeholders to concentrate more efforts on activating plans and strategies capable of helping in deepening the pension fund industry considering the crucial roles of pension in achieving bigger band for financial inclusion in the country.
Oluikpe, challenged pension fund operators to be more creative in product designs, introducing products that hold multiple benefits to serve as an anchor in attracting more into embracing the scheme.
According to him, the era of one size fits all in consumer engagement is gone thus making room for operators to be more ingenious in their product designs.
“We have to sufficiently target specific segments of the society with varying needs meaning that operators must remain innovative and creative with services and products. We need to rethink our old ways”, he insisted.
