Matthew Otoijagha
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 recent pension forum 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. She listed the challenges as financial illiteracy and low incomes in the country.
According to her, “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. 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.