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Tag: micro pension

  • ‘Micro pension product now selling’

    Pension Fund Administrators (PFAs) have started selling micro pension product to workers in the informal sector, Pension Fund Operators Association of Nigeria (PenOp) President, Mrs Aderonke Adedeji, has said.

    This is coming five weeks after the  launch of the scheme by President Muhammadu Buhari in Abuja.

    Speaking with reporters in Lagos, Mrs Adedeji, also the Managing Director of Leadway Pensure, said the PFAs, through the sales, have been enrolling workers into the scheme.

    She added that some issues were being ironed out to ensure that the scheme is seamless.

    Adedeji said: “The micro pension led by the industry regulator, the National Pension Commission (PenCom), has been launched. On whether we have started selling the product, the answer is yes. The industry has started selling and people have been enrolled into the micro pension scheme.

    “Having said that, there are still some operational issues that are being ironed out to ensure that the entire scheme is seamless. We also need to ensure that we learn from lessons and take advantage of the lessons that we learnt from the implementation of the  Contributory Pension Scheme (CPS), particularly in terms of how we register people and the quality of data that we collect as operators.

    “This process is ongoing and that is perhaps why you have not heard much as you would expect to hear about the new scheme. Presently, there is an ongoing dialogue between operators and the regulators and once all these issues are sorted out, there will be much more activity and publicity.”

    She said the fund is important to the nation’s development.

    “As a nation, about 14 years ago, we did not have any structured pension scheme and when the Pension Reform Act was enacted in 2004, it only covered the formal sector. Pension is a necessity in any nation because it is used to provide financial stability in old age.  Any nation that cannot look after its own people would weaken the entire fabric of the society. So micro pension is very significant.

    “Right now, it would be impossible to put a number to how much we have sold, but what I think is most important is the enlightenment and education that needs to go on. We want people to change their habit and imbibe savings culture. There’s a need for a lot of enlightenment and PenCom and the operators have embarked on enlightenment campaign. Even the formal sector took a lot of enlightenment for us to get to where we are now. So the key really would be a lot of publicity, enlightenment and a lot of engagement at all levels.

    “To make the scheme attractive, different incentives have been built into the scheme. For example, the ability to pay contributions any time you feel like it. Another incentive is that there is a contingent part of that contribution that would enable you to withdraw up to 40 per cent of your savings anytime you feel. These are some of the incentives built into it and like anything, it will evolve and as we gain experience I am sure that there will be more incentives that would be built in overtime,” she added.

  • How far can micro pension go?

    In the view of stakeholders, the introduction of the micro pension scheme by the federal government to cater for workers in the informal sector will bode well for the economy, reports Moses Emorinken

    In what financial and economic analysts have described as a very ambitious plan, the federal government hopes to provide about Nigerians, especially those not already captured in the existing pension scheme.

    President Muhammadu Buhari during the official launch of the Micro Pension Plan at the Presidential Villa in Abuja, last week, assured pensioners of his administration’s renewed commitment to pension payment despite the meagre resources within government’s disposal.

    The president reportedly noted that the initiative is part of the government’s plans to ensure that hardworking Nigerians live in dignity and retire in peace when due.

    The President disclosed that the MPP is expected to mobilise about N3 trillion savings from the informal sector into the N8.6 trillion pension assets in the country. According to the National Pension Commission, its goal is to achieve pension coverage for 30 million people in the informal sector by 2024. Nigeria’s informal sector constitutes an estimated 69 million workforce, which represents an estimated 88 percent of the country’s workers that currently lack pensions for their old age.

    ABC of the micro pension scheme

    Speaking in an interview with our correspondent on the modalities of the micro pension scheme, the Pencom boss, Aisha Dahir-Umar, said, “The National Pension Commission has issued a robust Guideline on Micro Pension Plan pursuant to the provision of Section 2(3) of the Pension Reform Act 2014. The Guideline spelt out detailed legal, institutional and operational frameworks for the administration of the product by licensed pension operators from the point of enrolment to the point of accessing benefits from the pension account by participants.”

    Target participants

    Micro Pension Plan targets the significant majority of Nigeria’s working population who, incidentally, operate in the informal sector. Participants are expected from various informal sector workers including market women, members of the National Union of Road Transport Workers (NURTW), members of Textile, Garment and Tailoring Associations, Keke Napep and Okada Riders Associations, Butchers Associations, workers in the Movie and Performing Art industry, mechanics and other workers in the automotive industry and single professionals like lawyers, accountants and many others.

    Micro Pension Plan is designed to fit the peculiarities of these informal sector groups. The National Pension Commission had extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements.

    Echoing similar sentiments, the Head of Corporate Communications of PenCom, Mr. Peter Aghahowa said, “The Micro Pension Plan (MPP) came to be as a result of amendment of the Pension Reform Act of 2014. Recall that when the Contributory Pension Scheme (CPS) commenced, it commenced with the pension reform act of 2004, before it was revised in 2014. When it was revised in 2014, one of the provisions that was revised was an expansion of the scope, not just limiting it to the formal sector as the 2004 act is, but now the revised law expanded it and included the informal sector. It is an initiative from Nigeria that is derived from the Contributory Pension Scheme.”

    Best practices

    According to the image-maker of PenCom when the micro pension scheme was formally introduced into the Pension law in 2014, ahead of its implementation, the Commission looked at other jurisdictions like Kenya, Ghana and India.

    “These are jurisdictions that are similar to our demography. These countries have had very vibrant pension schemes for the micro pension plan. These are countries where this kind of pension plan has been running for some time.”

    On the likely challenges being envisaged, Aghahowa said the main challenge is the issue of enlightenment and education. Financial literacy generally is low; how much more pension literacy which a subset of financial literacy. Now that we are dealing with a sector that you might have quite a number of them not so educated, there is need for them to be enlightened. That I believe is a challenge that can be strategically overcome.

    Safety of funds

    Concerning the safety and protection of the funds of those hoping to key into the Micro Pension Scheme, he explained that the Contributory Pension Scheme has run now since 2005; over thirteen years, and the commission has good stories from beneficiaries because it is a funded scheme.

    “A lot of things have been built into the pension industry, even the separation – the Pension Fund is not the administrator that holds the funds, the Custodians have the funds. The administrator administers; so you can see that a lot of safeguards have been built into the system and I believe that is why it has been so successful. Safety of the funds is a key and principal objective of PenCom. I am assuring the public that there is no cause for alarm.”

    Stakeholder voices

    Expectedly, some of the representative bodies at the informal sector have expressed excitement over the introduction of the micro pension scheme.

    Speaking with a cross-section of the bodies they said it was an idea whose time has come.

    Firing the first salvo, the Public Relations Officer of the National Association of Nigerian Traders (NANTS), Ijeoma Anuforo said, the scheme no doubt gives operators in the informal sector the opportunity to put a little money aside for contingency future plans.

    “Now we can plan towards retirement at the pace we want to maintain the kind of lifestyle we want when we retire. It is a massive pool of people and good business for the Pension Funds Administrators (PFAs). We are presently in talks with PenCom and PFAs. We are also going to have sensitisation programmes in every market where people are going to be signed up immediately.”

    The President of the National Union of Road Transport Workers (NURTW), Comrade Najeem Usman Yasin, explained that “the pension plan is a timely innovation and the much needed intervention for the informal sector.

    “Our drivers do not have pension at the time they are aged or retiring from driving. With this innovation from PenCom, our members can key into it such that by the time they are retiring they will have something to fall back on.”

    The General Secretary of the National Union of Textile, Garment and Tailoring Workers of Nigeria (NVTGTWN), Mr. Issa Obalowu Aremu, his union is super excited that PenCom has designed a special scheme for the large army of the informal sector workers.

    He said that: “The informal sector has a workforce potentially close to 80 million Nigerians; this way we might be looking at multiple trillions of Naira.

    “We started to be part of the Contributory Pension Scheme in 2004, and can bear witness that today that the workers in the formal sector are secured in terms of their pension after work. Don’t forget that there have been crisis of compensation in this country.

    “Today, in terms of regularity of payment for workers who have contributed and are due for retirement, they get their dues as at when paid. It has been better managed, so I want to commend the National Pension Commission. The only way we can overcome income poverty is the social protection through pension schemes.”

    The President of Pension Funds Operator Association of Nigeria (PenOp), Mrs. Aderonke Adedeji, “When the scheme started over 12 years ago, it was essentially for the organised private sector, public sector and the states. If you look at the demographics of the country, clearly the larger percentage were excluded from the scheme.

    “This was not intentional, and I believe the way the scheme started was really the best way for it to start. Structures, systems, processes had to be put in place, even the law was changed in 2014.

    “For the industry, it is a continuation of our mandate and an extension of the benefits of providing long term security for every Nigerian.

    “As operators, our responsibility jointly with PenCom is enlightenment, which is the first and most important aspect of this plan.

    “Second is the process of registration. It is our job to bring people onboard. The registration process has to be as seamless and simple as possible. It will largely be technology based because in order to reach the masses and give easy access, there will be a lot of reliance on technology.

    “Next will be to begin to invest funds, administer the funds, and to keep people’s record to ensure that they are aware of their balances are. When it’s time for payment, we process payments as well. The fact that it is now available to everybody is a major relief to most people. But like anything that is new, we will need time to build it up. I believe in another ten years when we look back we will realise that a lot of progress have been made.”

    The Head of Communication of Abuja Markets Management Limited (AMML), Mr. Innocent Amaechina, the commission needs to intensify in its strategy and rate of engagements and education of the participating public from the informal sector.

    “I expect that people will readily accept the new initiative by the Commission because nobody wants to be left behind.

    “Already, we hear that those in the informal sector complain about some things that the people in the public service are enjoying that they do not enjoy. The informal sector is the driver of the economy, but they sometimes feel neglected; so I expect that they will accept it with both hands.

    “I expect PenCom to give us a product that will be tailor-made specifically for the informal sector; they cannot expect to use the same criterial for the formal and public sector for us.”

    On his part, Dr. Bond Nnnamani, who is the Chairman of Gudu Amalgamated Traders Association in Abuja said: “PenCom has contacted us concerning the Micro Pension Scheme, however, we have not concluded with them on the modalities.  It is a very good venture. It helps us to be better prepared and secured towards old age. The challenge with most business men and women is not that we don’t have money, but that our savings culture is very low because we normally plough back most of our profits into the business. The scheme is surely a very good one from the Commission.”

    For the Chairman, Garki Market in Abuja, HRH Igwe Friday Ozochimereze, “the PenCom have not done enough to reach out to stakeholders in the informal sector especially in the areas of regular engagements and proper education about the scheme.

    “I believe that the Micro Pension Scheme will be beneficial to my people. However, they (PenCom) need to do more to reach out to us,” he said.

    More people continue to show their readiness to engage the scheme which will give to them upon demand the dividends of their investment when the need for it arises.

    The Chairman of Zone 3 Neighbourhood Traders Association in FCT, Mr. Okonkwo Ifeanyi, who spoke with our correspondent, explained that some Pension Fund Administrators have approached his market but have not reverted to them on a full plan and modality for the scheme.

    “We are greatly expecting the scheme to kickoff, but the PenCom needs to spend more time enlightening the people because a lot of us still have ill-feelings towards pension,” he said.

  • Micro Pension: Informal sector workers seek subvention, others

    Following the launch of Micro Pension Plan by President Muhammadu Buhari, workers in the informal sector have urged the Federal Government to provide at least 50 per cent contributions as subvention under the plan for the workers.

    They are asking that workers who are 60  and above, who cannot join the pension plan, should be entitled to social pension as it is done in developed and developing countries.

    The workers, under the auspices of the Federation of Informal Workers Organisation of Nigeria (FIWON), spoke while reacting to the Micro Pension launch.

    FIWON Secretary-General Gbenga Komolafe said the Federal Government’s initiative to capture the sector was good. He however noted that the Federal Government through the National Pension Commission (PenCom) did not look into their demands.

    He said: “The launch of micro pension is a welcome development but the Federal Government is yet to meet our demand. We are demanding an old age care support system for workers under the informal sector who are above 60 years and cannot join the pension plan.

    Read Also: The coming of micro pension plan

    “We also want the government to part-fund the contributions required in the scheme. It is not enough for the government to say we should contribute to pension; it should also part-fund the scheme for us. Even if it is not 50-50 as we have in the formal sector, but at least, it should encourage the informal sector.

    “If government part-funds it, the money will still be in the system while it encourages participation and helps to obviate the effects of inflation. The categories of workers in the informal sector that contribute to the economy is huge, but they do not enjoy the benefits that the working people in the formal sector enjoy. It is in the interest of everybody that the government invests in the informal sector.

    “The government’s attitude and the need for it to create space for the people to carry out their trade activities is very important. The government is talking to us about pension, but sometimes they destroy our spaces where we engage in trade. Where are we going to get money to save for the future?”

    Komolafe stated that FIWON, which was launched in 2010 with about 24 organisations of former workers, has about 170 organisations across 21 states.

    He said the association ensures that the members benefit from mortgage care and support, maternal care and support and other basic amenities.

    He called on its members to stop playing lottery with their hard earned money and participate in the pension scheme to secure their future.

  • ‘Micro pension will bridge financial inclusion gap’

    Micro pension has become an invaluable tool to bridge the terrible deficit in financial inclusion that exists in the larger number of the unstructured Nigerian population, the informal sector, the Managing Director, IEI-Anchor Pension Funds Glory Etaduovie, has said.

    He made this known in a statement made available to journalists in Lagos.

    Etaduovie expressed worry over heightening challenge of social security in the country.

    He pointed out that as people age, increasing fears and concerns of what the future offers come to the fore.

    He stated that for those in more structured environments, responsible employers think and put in place an internal plan to help ageing and retiring staff to settle down to a secure retirement.

    He observed that key government parastatals such as the Nigerian National Petroleum Corporation (NNPC), Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), among others are enviable places to retire.

    He said other government organisations similarly enjoy some guarantees but not robust structures for retirement.

    He lauded PenCom’s role in facilitating this financial inclusion through the micro pension plans.

    He said: “Major and structured financial, oil and gas and some manufacturing and private sector organisations have done fairly well, too, in pension provision.However, the larger number of the unstructured Nigerian population remain not catered for. They are left to chance and limits of their knowledge and capacity to deal with the challenges and vagaries of getting old. Ironically, we are all affected, because they are our uncles and aunties; brothers and sisters; fathers and mothers who now lean on us for family pension plans (if any), or handouts of stipends that cater for only a few days, and back to square one. Ageing becomes undignified. Health and maintenance remain a critical issue of ageing. The current working population is thus under siege. There are endless requests for support here and there. Sadly, this has also promoted corruption – greed apart.

    “Financial inclusion is total. Total in the sense that this philosophy drags in the so-called underprivileged or low income segment into the opportunities and exposures that financial world offers. A lot of people are shut of a world of opportunities the financial sector offers to enhance their present and future lives. Though beyond pension only, this platform now sucks them in through their cluster bodies to expose them to the knowledge and benefits of not only pension plans, but puts them into a community of people who can tap into other benefits accrue-able to cluster bodies. This thus makes up for short falls of individual small businesses access to comprehensive financial services available to all. This of course leads to empowerment and economic growth and development.

    “PenCom has done well so far. It is a new learning needing to be domiciled. They have had to wade through un-structured parts to create in-routes for industry path and public assimilation and integration. Change pioneering and buy-ins are amongst most difficult things to achieve. This is through the micro pension plans. It is for individual professionals, artisans, retail or individual entrepreneurs, farmers, among others. It captures the unstructured working environment. It is not necessarily micro by way of income. Micro as a name might just be for want of a better name.”

    Speaking on IEI-ANCHOR Pensions preparedness on the micro plan, he said the company has put in place internal structures, adding that they also closely monitor the regulator’s ‘dance’ steps and domiciling same in our company.

    “Staffing and a robust ICT network is being enhanced. Remember that, those in the micro pension sector constitute no less than 60 per cent of the population. There is also a growing tilt towards increasing entrepreneurial drive, as the direct jobs are decreasing. It is thus a larger untapped market.

    “It is important to develop people-friendly products to both attract them and accommodate their sensitivities. We are working at that. Reaching out to them and educating them is of paramount importance. The mode of achieving this is very important as well. It has to be both creative and sensitive. We are noting all of these”, he noted.

  • Pencom to launch micro pension

    All is set for the launch of Micro Pension Scheme by the National Pension Commission (PenCom) this month.

    The planned micro pension is expected to attract over 20 million workers and N3 trillion into the pension assets.

    With total pension assets as at October, 2018 at N8.45 trillion, the country’s pension assets are expected to rise to over N11 trillion with the micro pension plan.

    Investigation revealed that the pension industry regulator, PenCom has put all mercenaries in place to ensure smooth launch of the plan.

    To ensure seamless operations, PenCom, together with pension fund operators have built robust Information Technology (IT) infrastructure that will support the plan.

    In preparation for the take-off of the schame, the commission said it has also had engagements with informal sector groups, such as, the Nigerian Union of Textile, Garment and Tailoring Workers of Nigerian (NUTGTWN), a body consisting Self- Employed Tailors and Garment Workers; partner trade associations, Non Governmental Organisation (NGOs) and religious bodies.

    PenCom Acting Director-General, Mrs Aisha Dahir-Umar, at a pension forum in Lagos, said the implementation of micro pension will improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement.

    The scheme, when operational, she said would capture self-employed people, especially those with irregular income, usually in the informal sector are largely financially uninformed with limited or no access to financial services especially pension plan.

    Section 2(3) of the Pension Reform Act, 2014 legal framework extends the coverage of the Contributory Pension Scheme (CPS) to self-employed persons through micro pension scheme.

    The Head, Research & Corporate Strategy, PenCom, Dr. Farouk Aminu, added that the commission is working on ensuring that the plan commence as planned, noting that this is a development that could enhance the growth of pension assets in the country.

    He stressed that the plan has the potential to generate about N3 trillion to the pension assets, while it intends to mobilise about 12 million contributors within five years.

    On benefits to be derived, Dr. Aminu noted that self-employed people and workers in the informal sector could reap by participating in the plan, saying in addition to providing income for them at old age and inculcating a savings culture through highly protected and regulated investment. The plan would afford them the opportunity to connect to other programmes of government while helping to finance infrastructure across the country.

    He said: “The self-employed can as well use the balance in their Retirement Savings Accounts (RSAs) as equity contribution for residential mortgages and support their businesses and benefit from other micro-credit schemes and special awareness programme affiliated to the scheme, he said.

    “The additional benefits to self-employed persons and informal sector workers include the cover provided under the Pension Protection Fund (PPF). Under this arrangement, government would bridge shortfalls or financial losses from investment of their accumulated retirement savings and guarantee them minimum pension in retirement, irrespective of how much they are able to save before retiring. The plan will be funded by an annual subvention of one per cent of monthly wage of Federal Government employees, annual levy on PenCom and pension operators as well as pension fund investment income.”

    The Head of Corporate Communications, PenCom, Mr. Peter Aghahowa, also added that the scheme is made flexible for people to easily join, while the method of contribution is decided by the contributors, who are to choose whether to contribute daily, weekly, monthly, quarterly, and so on.

     

     

  • PENCOM engages telcos, regulators, others on micro-pension

    The National Pension Commission (PenCom) has commenced the sensitisation of network service providers and other relevant regulators for efficient and effective registration of people for micro-pension scheme. The Commission plans to kick-start the scheme next year.

    A statement by the Commission said workers in the informal sector are also being targeted with a view to creating the enabling environment and buy-in.

    According to the Commission, it is evident that a robust technological platform that would support the provision of customer services is necessary to effectively and efficiently register, collect contributions, provide Retirement Savings Account (RSA) support, pay benefits and provide financial advisory services to this class of workers.

    The statement read: “Coincidently, special mobile phone applications had been successfully implemented in some jurisdictions for financial transactions, including provision of pension services to the self-employed and informal sector workers. The success stories of these applications drives the confidence that similar platform can be designed and implemented in Nigeria.

    “Consequently,  the Commission had already commenced the sensitisation of service providers and relevant regulators as well as the targeted workers in the informal sector with a view to creating the enabling environment and buy-in. In addition, a Department has been established in the Commission to drive the implementation of the Micro-Pension plan.”

    The Commission explained that the Pension Reform Act (PRA) 2014 expanded coverage of the Contributory Pension Scheme (CPS) to the self-employed and persons working in organisations with less than three employees.

    “As this category of workers constitute the larger percentage of the working population in the country, there is no doubt that to achieve the Pension Industry’s strategic objective of covering 30 per cent of the working population in Nigeria under the CPS by the end of 2024, all efforts should be on deck  to extend coverage to this important segment of the Nigerian economy.

    “In addition, due to their widely dispersed nature and generally low and irregular incomes, there is need to provide a pension plan that would meet their special characteristics. In this regard, the Micro-Pension plan initiative has been conceived within the context of an industry wide strategy to bring this class of workers on board.”

     

     

     

  • PENCOM sensitises on micro-pension

    The National Pension Com-mission (PENCOM) has sensitised  Nigerians on micro-pension, multi-fund structure, voluntary contribution and other issues under the Contributory Pension Scheme (CPS). The enlightenment was done at the just-concluded Lagos  International Trade Fair.

    PenCom’s Head of Corporate Communications Peter Aghahowa said the pension clinic was used to clarify pension-related matters that bother workers and retirees.

    He said the pension clinic established at the Trade Fair was part of several initiatives that the commission embarked upon to sensitise and enlighten the public on the CPS.

    He said: “The Commission was at the Trade Fair to inform people on what the CPS is all about. It is part of the initiatives that the Commission has been bringing out to inform and educate the general public about pension schemes in Nigeria.

    “We had a stand at the trade fair which we named the pension clinic and it created an avenue for people to come in and get enlightened and educated and also make enquires about pension related matters. So we usually seize opportunities like this to sensitise people about different aspects of pensions.

    “Moreso, we have the initiative of the micro pension which we are working hard to launch come 2019. So it is another avenue to enlighten and inform people about that new initiative.

    “The commission also came up with a guideline for voluntary contribution to align and streamline the process and procedures for voluntary contribution. Before now of course, even the formal sector has engaged in voluntary contribution which is an additional contribution to the statutory one. The guideline streamlines the process of making and withdrawing contributions. It is expected to help the pension industry identify a uniform way of dealing with voluntary contribution transactions”, he added.

     

  • All you need to know about micro pension

    The Micro Pension Plan refers to an arrangement for the provision of pension to the self-employed and persons operating in the informal sector.

    The Micro Pension Plan is also aimed at low-income earners, who are often financially illiterate and usually have limited or no access to financial services. It is also the sought-after solution to old age poverty as can be found in jurisdictions such as India, Kenya and Ghana that have successfully implemented a Micro Pension Plan.

    Features

    Due to the informal sector’s peculiarities, the Micro Pension Plan would be flexible, safe and convenient.

    Benefits

    • Over time, old age poverty will decrease with the introduction of the Micro Pension Plan because the informal sector worker would have saved for retirement while active.
    • The additional savings from Micro Pension Plan would aid economic development and macro-economic stability through investment in infrastructure and financial markets.
    • Enhance pension coverage and improve Gross Domestic Product (GDP).
    • Contributions will pass to the next of kin in case of contributor’s death.

    Challenges

    Despite the benefits of the plan, there are a few envisaged challenges that may hinder the smooth implementation of the Micro Pension Plan in Nigeria. The challenges are as follows:

    • Financial Illiteracy: Some of the low-income earners, who constitute the third segment of the informal sector are mostly illiterate and thus, inexperienced with formal financial transactions and institutions.
    • Low incomes: Unlike the high-income earners that can deposit in lump sum, most low-income earners are daily wage workers and as such are unable to deposit large amounts.

    The Commission expects that the implementation of the Micro Pension Plan will yield positive results for Nigerians and the Nigerian Pension Industry. There is however need to create more awareness about the plan.

     

  • PenCom develops IT infrastructure for micro pension

    The National Pension Commission has developed the Enhanced Contributor Registration System (ECRS) to facilitate the enrolment of participants in the Micro Pension Scheme when the scheme is rolled out, the Commission’s Acting Director-General, Mrs. Aisha Dahir-Umar, has said.

    Dahir-Umar who spoke in Calabar said the ECRS was developed to clean-up data in the Contributory Pension Scheme (CPS).

    She stated that the clean-up will enable the Commission to not only facilitate the enrollment of participants in the Micro Pension Scheme, but to also facilitate the transfer of Retirement Savings Account (RSA) holders from one Pension Fund Administrator (PFA) to another.

    She stressed that the Micro Pension Scheme will take off fully once the ECRS is fully tested and deployed.

    She disclosed that the Commission released the guidelines on micro pension, the first step in giving effect to Section 2(3) of the Pension Reform Act (PRA), 2014, which provides that employees of organizations with less than three employees as well as the self-employed persons shall be entitled to participate in the CPS in accordance with the guidelines issued by the Commission.

    She said: “PenCom, in accordance with the PRA 2014, introduced the Micro Pension Plan. The plan is set to include the self-employed and persons working in organisations with less than three employees. It aims at ensuring that the informal sector participants save towards their old age. It is also expected that the plan would expand the coverage of pension contributors by an estimated 30 million people by the year 2024. This category of workers constitutes a large percentage of the working population in the country.

    “To implement this initiative, the Commission segmented informal sector into three broad categories namely; the low-income earners, the high-income earners and the small & medium scale enterprises (SMEs). Each of these categories will be targeted with appropriate pension products and sensitisation programmes that meet their various peculiarities.

    The Commission has recently exposed the draft guidelines and framework on Micro Pension Plan to its stakeholders and the general public for comments and observations and is on the verge of finalizing the guidelines and framework. In addition to the exposed draft guidelines and framework, the Commission is working on the IT infrastructure that will support the launch of the Micro Pension Plan.”

    She noted that due to the peculiarities of the informal sector, the Plan would be flexible! Safe, convenient and simple.

     

  • Micro pension: PenCom eyes 30m low earners, others

    • Explains reasons for suspending recruitment

    The micro pension plan is targeting about 30 million people, including low-income and high-income earners by 2024,  National Pension Commission (PenCom) Acting Director-General, Mrs Aisha Dahir-Umar has said.

    The Acting DG, who spoke at a seminar organised by Business Today Online in Lagos, said the Commission is also targeting the Small and Medium Scale Enterprises (SMEs).

    She said this category of workers constitutes a large percentage of the working population in the country.

    She disclosed that due to the peculiarities of the informal sector, the micro pension plan would be flexible, safe, convenient and simple.

    Mrs Dahir-Umar explained that the commission aims to introduce the micro pension plan in accordance with the Provisions of Section 2(3) of the Pension Reform Act (PRA) 2014.

    Highlighting the benefits of micro plan, she said that over time, old age poverty will decrease with the introduction because the informal sector worker would have saved for retirement while active.

    She said additional savings from micro pension would aid economic development and macro-economic stability through investment in infrastructure and financial markets.

    She added that it would also enhance pension coverage and improve Gross Domestic Product (GDP); while contributions will pass to the next of kin in case of contributor’s death.

    She, however, noted that despite the benefits of the plan, there are a few envisaged challenges that may hinder the smooth implementation of the micro pension plan in Nigeria.

    The Acting Director-General listed the challenges as financial illiteracy and low incomes in the country.

    She said: “Some of the low-income earners, who constitute the third segment of the informal sector, are mostly illiterate and thus, inexperienced with formal financial transactions and institutions.  Unlike the high-income earners that can deposit in lump sum, most low-income earners are daily wage workers and as such are unable to deposit large amounts.

    “The Micro Pension Plan refers to an arrangement for the provision of pension to the self-employed and persons operating in the informal sector. The Micro Pension Plan is also aimed at low-income earners who are often financially illiterate and usually have limited or no access to financial services.  It is also the sought-after solution to old age poverty as can be found in jurisdictions like India, Kenya and Ghana who have successfully implemented a Micro Pension Plan”.

    Speaking on the way forward, she said the Commission expects that the implementation of the micro pension will yield positive results for Nigerians and the pension industry.

    Meanwhile, Mrs. Dahir-Umar has explained the reasons for suspending the recruitment of 41 workers into the agency.

    According to her, the exercise which was scheduled to resume on May 2 last year, was suspended due to anomalies and irregularities discovered in the process.

    She said 41 candidates had been given employment letters after an interview which was cancelled over some irregularities.

    “Half of them were asked to resume on May 1 and the rest in June. The Federal Character Commission (FCC) gave certificate of “no objection” for the interview. The next step was for the Commission to request for Certificate of Compliance to give out letters of employment following the interview. While that was been awaited, the executive of PenCom was sacked. The DG as at the time quickly distributed the letters, without the certificate from FCC.

    “Meanwhile, the FCC in its letter authorising the interview had given two conditions. That the Commission must collect the required certificate before giving out employment letters and must use that recruitment to balance the lop-sidedness of staffing in the Commission.

    “When I resumed in April last year, our Human Relations department gave me a letter from the FCC suspending the resumption of those recruited. Based on that letter, I asked HR to meet with the FCC to find a way forward. The FCC advised that the exercise be suspended, that those affected should be informed and that they should be considered in subsequent recruitment exercises.

    “Every recommendation was followed to the later. We did try to get the National Assembly House Committee on Fededral Character to reconsider its stand through the House Committee on Pension and the Senate Committee on Establishment but both failed. Instead, a letter of reminder was sent to us on the suspension. The Commission was also invited and warned not to accommodate the new recruits due to irregularities of the exercise.

    “Every recommendation was followed to the later. We did try to get the House Committee on Federal Character to reconsider its stand through the House Com-mittee on Pension and the Senate Committee on Establishment. Both failed.”