By Edet Udoh
Nigeria is about to pool another investible fund as the federal government targets a N3 trillion contribution from the newly launched Micro Pension Plan (MPP) designed to cover the self-employed and others in the informal sector.
Participants under this scheme are 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.
At the scheme that was launched by President Muhammadu Buhari at the State House, Abuja, the president supervised the registration of a Keke NAPEP operator, Sagir Shawai, a resident of Karu village of the Federal Capital Territory, to signal the debut of a pension programme conceived to bring Nigerians at the grassroots into the pension nets.
While appealing to trade associations, workers unions and non-governmental organisations (NGOs) in the informal sector to join hands with the government in enlightening their members on the importance of the scheme, Buhari said “This initiative will capture those that are not fully captured in the existing pension scheme.”
Earlier in her welcome remark, Acting Director-General National Pension Commission (PENCOM), Mrs. Aisha Dahir-Umar, said the launch of Micro Pension Plan today has opened a window of opportunity to self-employed Nigerians and those working in the informal sector, to participate and enjoy the benefits inherent in the Contributory Pension Scheme.
She noted that the Contributory Pension Scheme has been very impactful in Nigeria since its implementation in 2004.
It has pooled a long term domestic capital totalling over N8.74 trillion worth of pension assets from over 8.46 million formal sector participants as at January 2019. This has gradually changed Nigeria’s financial landscape and rejuvenating infrastructures.
“This, by extension, is also transforming the course and pace of our socio-economic development. For instance, N6.51 trillion, representing 73% of the total pension assets is invested in Federal Government Securities issued to finance various activities of Government. Thus, in the area of infrastructure alone, the pension funds invested about N95.31 billion in the N200 billion Sukuk issued by the Federal Government.
“Similarly, out of the N10.67 billion Green Bond issued by the Federal Government, pension funds invested N7.19 billion. Consequently, we believe that the enlistment of the informal sector into the pension savings net would boost the quantum of available long term investible funds that would galvanize national development efforts.”
She said the launch of Micro Pension Plan unveils financial product, which democratizes the savings culture in Nigeria in a systematic and efficient manner, adding that the product also perfectly aligns with the current social empowerment prgrammes of the Federal Government as it seeks to ensure, in the long term, the sustainability of the benefits of the empowerment programmes for the participants, who may seize this opportunity to save for their old age
Prior to this stage, PENCOM had extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements.
The product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts. Access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms.
The 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.
Already, the licensed Pension Fund Operators have, pursuant to the Guidelines, put in place appropriate structure, infrastructure and trained manpower to ensure adequate coverage and the provision of excellent customer service to the Micro Pension Plan participants.
Thus, a prospective Micro Pension contributor is required to open a Retirement Savings Account (RSA) by completing a physical or electronic registration form with a Pension Funds Administrator (PFA) of his/her choice.
The contributors may make contributions daily, weekly, monthly or as may be convenient to them. Every contribution shall be split into two, comprising 40% for contingent withdrawal and 60% for retirement benefits.
The contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto. The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion. The remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years.
Pursuant to its regulatory and supervisory mandate, the Commission had established a separate Department dedicated to the supervision of all matters relating to Micro Pension Plan, including enforcement of compliance with the Guidelines and customer complaint handling and resolution.
PenCom’s objective is to ensure efficiency and effectiveness in service delivery as well as transparency and accountability in the administration of the product by licensed pension operators.
With the formal launch today and subsequent successful implementation, the Micro Pension Plan is expected to significantly expand pension coverage to greater number of Nigerians and further generate additional long term funds for Nigeria’s economic development. The Commission would collaborate with relevant stakeholders to sensitize and enlighten the target participants and members of the public on the features and benefits of the Micro Pension Plan.
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