Driving Personal Pension Plan
Recent licensing of the first accredited pension agent by the National Pension Commission has been described as the right tool for achieving mass inclusion of informal sector operators into pension scheme, writes Ebere Nwoji
Recently, the National Pension Commission (PenCom) licensed the first officially accredited pension agent with the primary purpose of expanding pension coverage to millions of Nigerian workers in the informal sector, still outside pension coverage.
The premier pension agent named Awabah, is expected to collect micro-contributions and build confidence in the pension system.
“They will take pensions to markets, villages, motor parks, farms, and workshops,” said the Director General PenCom Omolola Oloworaran.
According to the PenCom DG, the accredited pension agent, which regulation was introduced in September last year is designed to bridge the gap between pension fund managers and Nigerian workers, especially those of informal sector.
This latest move by PenCom to sweep millions of Nigerian informal sector workers into pension net has been commended and described as a positive response towards salvaging Nigerian micro business operators, artisans, and other self-employed workers from old age poverty.
It was also described as a step in the right direction towards pushing pension fund managers into joining force with the commission in marketing the contributory pension scheme and growing pension assets from the present figure of N27 .45 trillion to huge investible funds well above the present figure.
CPS / PFAs
For over 20 years since the establishment of the Contributory Pension Scheme by PenCom, Pension Fund Managers (PFAs) who were supposed to be at the fore front of marketing the scheme to Nigerian workers have not done so. Rather, they have been enjoying the compulsory regulation driving the CPS.
Indeed, going by their modus operandi, it will not be over statement to say that the PFAs do not have marketers and where they have, their marketers are passive and lacked the aggressiveness with which every marketer with new product uses to push products to the target market.
Suffice it to say that within these 22 years; the pension sector has experimented the CPS, the PFAs have been spoon- fed by PenCom, the regulator who does everything for them.
Indeed, the N27 trillion assets that has accrued from the scheme can be said to have freely flowed into their volt due to the compulsory nature of CPS for formal sector workers.
The operators face the first competition that compelled them to embark on competitive marketing in November 2020, when the commission kicked off pension transfer window which allows RSA account holders to transfer their contributions from one PFA to another in line with section 13 of the Pension Reform Act 2014.This compelled the PFAs to engage in aggressive marketing and improve on their services to customers.
With the licensing of the first pension agent, PFAs will now witness more competition and grabbing of businesses from each other through these agents.
What this means is that any PFA that thinks that it is business as usual and decides to remain in its comfort zone waiting for business to freely roll into its zone will be undone by the stiff competition that will ensue.
Industry stakeholders said the sector needed this nature of competition if they must tap into the huge potential in the informal sector market.
Indeed, the operators need to engage as many pension agents as the insurance sector at this critical time to be able to bring millions of Nigeria informal sector operators under pension coverage.
Pension agents
The agents should see themselves as foot soldiers of pension sector who with their buckled shoes should penetrate areas that seemed impenetrable and sweep out the least amount from the informal sector workers for savings into their RSA.
By the nature of their work, agents are persons, entities or system authorised to act on behalf of another to conduct a business, legal or personal matters.
Agents are known for their capacity to exert force, achieve or represent interest of their principal.
They act as representatives, intermediaries or instruments that cause change to achieve specific outcomes.
Apparently, pension sector needs agents to push the personal pension plan to the informal sector.
This is because, between March 28, 2019 when the former President Muhammadu Buhari launched the Micro pension plan for the informal sector workers and September 2025 when the present Director General of PenCom Oloworaran, rebranded it to become personal Pension Plan, only 200,000 contributors registered.
According to PenCom, out of these, by Q3 2024, only 12,241 had active funded Retirement Savings Account with total savings of approximately N967 million.
Further interpretation of this means that due to non-compulsory nature of the Micro pension plan, the PFAs were only able to rake in N967 million in six years whereas due to compulsory nature of the formal sector CPS, within the space of 21 years a whooping N27 trillion flowed to operators’ coffers. It then means that if the formal sector CPS was to be made voluntary like the Micro Pension Plan within these 20 years, operators would have realised just N3.223 billion in place of the current N27 trillion assets which the pension sector is sitting on now.
Pension sector analysts said this is a food for thought for pension sector operators to sit up and stop relying on regulator’s effort and legislation to push their business but to make use of this opportunity provided by the regulator in licensing agents and push the Personal Pension Plan to a successful end.
The analysts said given the huge population of informal sector operators, compared with formal sector, there are more opportunities for pension fund managers in the personal pension plan than in the formal sector CPS.
Enters Awabah Agency
At the launch of the Awabah agency, Oloworaran described personal pensions as “Vital national economic infrastructure,” saying expanding coverage beyond formal employment is now the commission’s top priority.
She noted that although Nigeria’s pension assets have grown to over N27 trillion with more than 10 million Retirement Savings Accounts, the gains have largely benefited formal sector workers. Citing National Bureau of Statistics data, Oloworaran said over 93 per cent of Nigeria’s workforce more than 75 million people operate in the informal sector, with most retiring without savings or a safety net.
According to the DG, the accredited pension agent regulation introduced in September last year is designed to bridge this gap by using trusted community agents to collect micro-contributions and build confidence in the pension system. “They will take pensions to markets, villages, motor parks, farms, and workshops,” she explained.
Technology, she added, would play a central role, enabling Nigerians to save as little as N500 from their phones or make weekly contributions without disrupting their work. Pension contributions under the scheme remain tax-deductible.
“If 2004 secured pensions for the formal worker, this decade must secure pensions for the informal majority,” Oloworaran said, aligning the initiative with President Bola Tinubu’s inclusive growth agenda,” the PenCom DG said.
Also speaking Chief Executive Officer of Awabah, Tunji Andrew, said the company would leverage existing payment infrastructure to simplify pension registration and contributions nationwide. He said with its new licence, Awabah planned to drive large-scale adoption of personal pension plans, targeting five million registered customers by 2026. He said that beyond contributions, Awabah also plans to simplify withdrawals under the personal pension framework.
“Contributors are allowed to withdraw up to 50 percent of their savings after the first three months, in line with existing regulations. We want pension withdrawals to be as seamless as using an ATM,” Andrew added.
The Personal Pension Plan scheme targets self-employed individuals, rig workers, traders, and artisans, while also allowing salaried workers with existing Retirement Savings Accounts to open additional personal pension accounts.
