The Nation Newspaper

Tag: micro pension

  • PenOp: micro pension’ll boost economy

    Micro pension billed to kick off before the end of this year will boost the economy, Pension Fund Operators Association of Nigeria (PenOp), has said.

    Its President, Mrs Aderonke Adedeji, said it will reduce the level of poverty associated with the informal sector and old age in the country.

    Micro pension is an arrangement for the provision of pension and retirement benefits to the low income, self-employed and persons operating in the informal sector.

    Mrs Adedeji who is also the Managing Director, Leadway Pensure PFA Limited spoke on: “Exploring the Micro Pension Concept” at the just concluded conference on insurance and pension in Lagos.

    She said a key policy issue in developing countries and an imperative in the countryare the planning and execution of micro pensions which is a missing link in increasing pension coverage in the country.

    She said over 90 per cent of the population in sub-Saharan Africa and South Asia are not covered by any pension arrangement due to general unemployment, low incomes, poor saving culture and above all pension arrangements that only favour workers in the formal sector.

    She further said the World Bank on the other hand estimates the size of the informal labour market to be between four and six per cent in the high-income countries and over 50 per cent in the low-income countries.

    She said what is needed for the micro pension plan is a unique regulatory framework to govern the scheme which the National Pension Commission (PenCom) is addressing.

    The OenOp chief also stressed the need for registration, investment of funds, risk management, membership, withdrawal of benefits and taxation incentives for participants that will be captured under the plan.

    She said: “The Pension Reform Act (PRA 2014) Section 2 (3) paved the way for micro pension.

    “Employees of organisations’ with less than three employees as well as self-employed are entitled to participate under the scheme in accordance with guidelines issued by PenCom. This group covers the informal sector which plays an indispensable role in Nigeria and world economies.

    “The informal sector plays significant role in micro pension as it generates jobs, amplifies entrepreneurial undertaking, reduces unemployment and underemployment, alleviates poverty and promotes economic growth.”

    According to her, the country  has an adult population of 96.4 million, out of which 50.8 per cent male and 49.2 per cent female with 63.9 per cent residing in the rural areas. “Meanwhile, 56.2 million adults representing 58.3 per cent of the adult population are under 35years while 21.8 million adults representing 22.6 per cent of the adult population have no formal education. 18.4 million adults representing 19.1 per cent of the total adult population have farming as their main source of income 18.9 million adults representing 19.6 per cent of the total adult population get their income from own business,” she added.

    Some of the attributes of the informal workers that isolate them from formal pension arrangements and  create a need for separate well thought out design are continuous job changes; likely opportunities to self-employment and not on payrolls in most cases.

    Others, she said, are temporary nature of employment contracts; educational status; unfamiliar with the workings of pensions and limited experience in dealing with formal financial institutions.

  • ‘Micro pension, multi-fund structure to change industry dynamics’

    •StanbicIBTC Pension to capture informal sector

    The proposed Micro Pension Scheme aimed at capturing the informal sector, the self- employed and the multi-fund structure under the Contributory Pension Scheme (CPS), which categorises pension fund investment, will change the dynamics of the pension industry, Stanbic IBTC Pension Managers Limited Chief Executive, Eric Fajemisin, has said.

    He spoke at a parley with the media on the company’s preparedness for the two programmes at Radission Blu, Victoria Island, Lagos.

    Fajemisin said the micro pension scheme and the multi fund structure, are initiatives with great potentials and capability aimed at taking the industry into the next phase of growth.

    He said the multi-fund structure, is expected to kick off on July 1, adding that schemes categorise pension fund investments into four funds by aligning the age and risk profile of RSA holders to match the four funds.

    He said the Fund One is targeted at people of 49 years and below, who want higher returns and are willing to take higher risks.

    Fajemisin said: “Membership into this fund is strictly based on request. Fund Two is aimed at people who are aged 49 years and below and still working but are satisfied with moderate returns and levels of risks. Fund Three targets people who are 50 years and above but still working and have very low risk appetite. In Fund Four are retirees, who have the lowest risk profile of all categories.

    “The most outstanding feature of this scheme, apart from diversification of pension fund portfolio, is the resolution of risk appetite based on the various categories of funds. For PFAs, the multi-fund structure provides considerable flexibility in terms of risks associated with the four classification

    “Whether we are speaking of the micro pension scheme, the multi-fund structure, or the pension industry in general, one key imperative is public enlightenment and awareness. PENCOM and the operators in the industry could never do too much in this regards,” he stated.

    He said regardless of the inner challenges, the micro pension has a capacity to deepen asset formation in the country, considering that 70 per cent of the Nigerian working population operate in the informal sector.

    Highlighting other benefits of micro pension, Fajemisin said, it will improve the standard of living for the elderly and provide safety of funds, provide other incentives, such as mortgage facilities where there is regular savings or streams of income for the pension account, providing health insurance and establish planning in majority of Nigerians, flexible contribution remittances at the contributors convenience, opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion in the country.

    Fajemisin, however, said the company is ready to kickstart the micro pension scheme, as soon as the regulator unveils the guidelines.

    He said Stanbic IBTC Pension Managers Limited is the largest pension fund administrator in Nigeria with assets under management in excess of N2.53 trillion and over 1.6 million retirement savings account holders nationwide, saying that from inception to December 2017, the company has paid N66.5 billion to 37,772 retirees.

    “We see tremendous opportunity not just to grow our assets, but to be of service to 70 per cent of population of Nigerians, who are in the informal sector. We believe that everybody requires a life after retirement.

    “We have put in place high level technology that will enable smooth relationship with our customers. We will also find other creative ways of communicating with them. We have a 24-hour functioning call centre in English, Yoruba, Ibo and Hausa. We will be ingenious in how we will communicate with the market. We will also take guide from people to know what their needs.

     

     

     

     

     

     

     

     

  • Micro pension scheme in limbo

    Micro pension scheme in limbo

    Plans by the National Pension Commission (PenCom) to capture about 250,000 workers from the informal sector through the Micro Pension Scheme under the Contributory Pension Scheme (CPS)  seem to have failed.

    The commission had promised in November 2016 that it would release the guidelines for the micro pension by mid-2017 and commence implementation by end of the year.

    According to the Commission, the micro pension scheme is expected to help boost the pension contributors to 20 million Nigerians by 2019 and boost 30 million by year 2024. It is also expected to generate  about N3 trillion to the pension assets, while mobilising about 12 million contributors within five years.

    But it was learnt that the Commission, under the leadership of an Acting Director-General, Mrs. Aisha Dahiru-Umar seems to be slowing down the take-off of the initiative. The initiative had been rigorously pursued during the tenure of the former Director-General, Mrs Chinelo Anohu-Amazu.

    The development is against the backdrop of efforts and huge funds deployed to the commencement of the scheme, setting up of micro pension department, among others.

    Beside the implication of the scheme not taking off as planned is that Nigerian workers in the informal sector would continue to be susceptible to old age poverty.

    Micro pension is a scheme targeted at self-employed people, especially those with irregular income, usually in the informal sector and are largely financially uninformed with limited or no access to financial services especially pension plan. This segment, which is estimated to be 70 per cent of the country’s population, largely exists in Nigeria as artisans and self-employed persons.

    Head, Micro Pension Department of PenCom,  Polycarp Anyanwu had earlier said the commission has been collaborating with chambers of commerce, as well as other government agencies in charge of small businesses such as Small and Medium Enterprise Development Authority (SMEDAN) and is working on guidelines for the commencement of the scheme.

    Anyanwu explained that micro pension initiative exists for the provision of pension coverage to self-employed persons.

    He said: “Micro pension initiative exists for the provision of pension coverage to self-employed persons. In Nigeria, it covers three strata of income earners namely lowest, middle and high income earners. “The commission is working assiduously to enroll 250,000 contributors within six months of the commencement of the initiative. The scheme is an offshoot of the pension industry five year strategic plan to expand the coverage of the CPS to 20 million contributors by 2019.

    “The commission is also targeting the self-employed in various trades and professions in Nigeria such as artisans, accountants, lawyers, mechanics, tailors, market men/women, hair dressers, architects, engineers among others.

    “We have reviewed the implementation of micro pension in other jurisdictions like Kenya and Ghana; formulated Guidelines and Framework on Micro Pension; consulted licensed pension industry operators and enhanced its information and communications technology capacity to accommodate the scheme.

    “The scheme will avail the contributor access to regular stream of retirement income at old age and improves living standards of the elderly. The contributors are to benefit from the various incentives to be offered by the PFAs adding that the initiative would deepen financial literacy and inclusion; secures financial autonomy & independence of retirees; passage of wealth to survivors in the event of death; increases National Savings and long term funds; promote growth development of the capital, mortgage and insurance markets and have positive effect on the national economy as pension assets increases.”

    A top official at the Commission who spoke on condition of anonymity affirmed that there is no activity in place at the moment to kickstart the scheme.

    Another official blamed the lack of a substantive DG and Board for the inertia at the Commission.

    Highlighting the challenges of the scheme, Chief Executive, Stanbic IBTC Pension Managers Limited, Mr. Eric Fajemisi, said though micro pension scheme is good for the country, it has challenges.

  • Transfer window, micro pension to drive industry this year

    Transfer window, micro pension to drive industry this year

    The initiatives of the National Pension Commission (PenCom) to bring the informal sector and micro pension into the Contributory Pension Scheme (CPS) and open a transfer window by the end of the year will make substantial differences in the industry, FUG Pension Managing Director, Usman Suleiman, has said.

    Suleiman, who made this known to reporters in Lagos, said operators were working with PenCom to achieve these.

    The transfer window, when established, would allow Retirement Savings Account (RSA) holders to transfer from their current Pension Fund Administrator (PFA) to another of his or her choice.

    This is in line with Section 13 of the Pension Reform Act, PRA, 2014.

    Suleiman said there was a very high possibility that the Transfer Window would be opened towards the end of this year.

    Basically, he said, the issue of structuring the transfer window was such that you do not have problems down the line.

    On bringing the informal sector and micro pension into the CPS, he said the industry is looking at moving from six million account holders captured in the CPS to a minimum of 20 million over the next three years.

    He said: “We expect the commencement of the micro pension to frog jump participation in the CPS. It is very peculiar. The guidelines we have at present are all looking at a formal structure but the micro pension requires an informal structure. We are looking at moving from six million account holders captured in the CPS to a minimum of 20 million over the next three years and the key is the micro pension and the integration of informal sector.

    “On Transfer Window, for instance, we want to be sure that technology is right, the process is right and all the parties involved and particularly the central clearing system is correct and right and every party involved on the same page. This is not an easy thing to do because it involves a lot of resources. But I can tell you we are aware that the regulators have been working very hard on it. They have made a lot of headways in recent times to get the technology and process in place and I strongly believe that in not too distant future we will see the transfer window structure in place.”

  • Pal Pension positions for micro pension

    Pal Pensions, one of the licenced Pension Fund Administrators in Nigeria, is bracing to take a strategic position of the evolving micro pension market, Executive Director, Finance and Operations, Mr Godwin Onoro, has said.

    Onoro, who spoke with reporters in Abuja, said the positioning would allow the firm to take higher market share to expand its already robust clientele base.

    According to him, the micro pension market segment remained untapped and yet to be explored by the pension operators. He however noted that the micro pension segment holds the future of the industry and the economy.

    He said: “While the operators are getting to the peak of the formal sector, the informal sector is yet to be explored. The exploration of the informal sector requires efforts of the entire industry which include the regulator and the operators.

    “Pal Pensions is already doing underground work in preparation for exploration of the informal sector market. The frame work has not been fine-tuned. All we are doing now is to prepare ground. We will have activities when the regulation is released. The regulation will make the picture, the modalities for operation clearer but as it is now, there are still some limitations.”

    Onoro said  Pal Pension ranks first in customer service. “We have put in place structures that make it easy for us to provide good service to our customers whenever they walk into our office. We have six regional offices and we have branches in all states.

  • ‘Micro pension, others to alleviate old age poverty’

    Micro pensions, Minimum Pension Guarantee, Pension Protection Fund and Multi-Fund Investment Structure are initiatives by the pension industry in the direction of alleviating old age and household poverty, Stanbic IBTC Pension Compliance Officer, Idu Okwuosa has said.

    She made this statement while speaking on, “Alleviation of Old Age Poverty – Operator’s perspective” in the country at a pension event held in Lagos.

    She however stated that to further alleviate both old age poverty, there is the need to extend the Contributory Pension Scheme (CPS) to all sectors of the economy.

    She noted that as the poverty level keeps on rising in Nigeria, the social demand on government also keeps increasing and yet, poverty alleviation remains the thrust of government reforms.

    She said: “It appears that poverty alleviation is the motivation for the pensions reform of government. In the light of this, additional social programmes that address the welfare of the poor and poverty alleviation at large, deserve serious attention.

    “In the light of this, additional social programmes that address the welfare of the poor and poverty alleviation at large, deserve serious attention. The importance of pension provision will continue to grow as individuals begin to place less reliance on family to look after them in old age and begin to face the reality that they need to look after themselves by building a nest egg for the future.

  • PenCom to unveil micro pension for celebrities, tailors, others

    PenCom to unveil micro pension for celebrities, tailors, others

    •’Old age poverty may increase’ 

    It is time to bring on board the self-employed including celebrities,  artisans, traders, plumbers, hairdressers, tailors, vulcanizers, food vendors, Okada/Keke riders, among others into the Contributory Pension Scheme (CPS) through micro pension, Director-General of the National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu has said.

    PenCom also highlighted the need for adoption of pension scheme by the big and small players in the informal sector, noting that study showed that old age poverty will be on the increase following failed family support system in Nigeria and current unemployment rate in the country. As a result of the development, few parents will depend on children at old age while individuals with no pension plan will retire to old age poverty.

    The Director-General represented by the Head, Micro Pensions Department of PenCom, Polycarp Anyanwu, made this known while speaking with reporters in Lagos. She said the micro pension’s guideline, which will soon be unveiled by the Commission has captured these categories of people in the informal sector, noting that among them are  low, middle and high income earners.

    According to her, the informal sector represents 70 per cent of Nigeria’s total working population hence the target of the Commission to extend coverage to a total of 20 million Nigerians by 2019 and 30 million by 2024.

    She stressed that pension funds have grown by over 300 per cent in 10 years while coverage of the working population by the scheme is growing in the public and private sectors.

    She said: “The number of registered contributors was 7.01 million as at March, 2016 representing about 6.9 per cent of total labour force in Nigeria and four per cent of total population.

    “Public sector represents 47 per cent while private sector represents 53 per cent. In the same vein, 26 states have adopted the scheme and are at different stages of implementation, the informal sector is largely uncovered by the scheme and represents about 70 per cent of Nigeria’s total working population. Therefore, there is a need for an expanded coverage.”

    Explaining the rationale for expanding coverage to the informal sector, Anohu-Amazu said study has shown that old age poverty will increase with the current unemployment rate in the country.

    She also said that failed family support system in Nigeria implies that few parents will depend on children at old age while individuals with no pension plan will retire to old age poverty.

    She noted that given the importance of pension as a safety net, there is the need to develop urgent solutions to enable active participation in the informal sector.

    Anohu-Amazu said micro pension is a long term voluntary financial plan for the provision of pension coverage to the self-employed, persons working for organisations with less than three employees and the informal sector workers.

    She noted that micro pension is a pension industry strategic initiative to have an inclusive and expanded coverage. Micro pension has been implemented in India, Kenya, Ghana and other countries.