PenCom to Redesign Micro Pension Plan to Boost Financial Inclusion

Ebere Nwoji

National Pension Commission (PenCom) said due to low growth and difficulty in pushing the micro pension scheme to the informal sector target market, it would  redesign the Micro Pension Plan to make it more attractive and boost financial inclusion, especially in the informal sector. PenCom stated this at an insurance and pension forum in Lagos.

Micro Pension Plan is an arrangement under the Contributory Pension Scheme that allows the self-employed and persons working in organisations with less than three employees to make financial contributions towards the provision of pension for their retirement or upon incapacitation.

It was launched since 2019 by the late former President Muhammadu Buhari. But it had recorded very slow growth, recording  only 172,936 contributors between 2019 and 2024.

Director-General, PenCom, Ms Omolola Oloworaran, who was represented by Head, Corporate Communications, PenCom, Mr. Ibrahim Buwai, at the forum, said majority of the Nigerian workforce was in the informal sector and there was need to capture them in the pension net.

Oloworaran said, “Let’s talk about this issue of expanding the Contributory Pension Scheme towards increasing financial inclusion to grow the informal sector. Even though the data out there of the Nigerian labour force says 70 million or 80 million or what have you. Be that as it may, the consensus there is that the labour force out there largely resides in the informal sector.

“How do we bring the informal sector under the contributory pension scheme?  It is even more important in a country like Nigeria, where the social safety net is not that strong. So pension is what will come in handy in terms of providing that social safety net.”

She added, “What we are engaged in doing now is looking at totally redesigning that product. And in the next few weeks, we are going to come out with a newly branded micro pension plan now called Personal Pension Plan.

“We recognise the issues with the product. One of the key elements of the product is that that product is going to be stratified into three strata because we recognise that the sector is not micro. It does not only capture people who are down the ladder- the artisans and so on, it also takes care of people who are up there, the entertainers, the sportsmen who are doing a one-man thing. These people need to be taken care of in the plan and there will be a section in the new plan for them.

“But the most important thing is to address the challenges especially around on-boarding. I am happy because even the keynote speaker mentioned technology-enabled on-boarding, so that is part of what we are looking at. We will put technology in place so that on-boarding can be as simple as going to the POS to withdraw or lodge money.”

The PenCom boss also disclosed that with the increase in FinTech, the regulators were considering adding a Super-Agent, who would come in and do the on-boarding on behalf of the PFAs.

“This speaks to the issue that we need to license Micro Pension PFAs so that this model will enable us to achieve that purpose,” she stated.

Regarding the deployment of pension fund to economic development, PenCom said it was an area it was focusing on.

Oloworaran said, “At the moment, we are renewing impetus to ensure that pension funds are invested in infrastructure, private equity etc. This is a two-pronged approach. Apart from the issue of economic development, we are also worried about the real return on investment for the benefit of the retirees and contributors. We are also aware that the recent inflation bite seems to reduce the real purchasing power and that is what is affecting the retirees also.”