Micro Pension to Raise Pension Assets by N3tn, Says PenCom

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Ebere Nwoji

The National Pension Commission (PenCom), has said the micro pension scheme which will be launched this month will add additional N3 trillion to the existing N8.45 trillion pension assets.
The commission, which also said the scheme would bring in about 20 million contributors into the contributory pension scheme(CPS), stated that all was set for the official launch of the scheme nationwide.

Micro pension is a pension scheme for the self- employed and persons operating in the informal sector.
The Contributory Pension Scheme established under Section 3(1) of the Pension Reform Act, 2014 provided for the inclusion of the informal sector into the scheme. Since then, PenCom has been trying to reposition its operations to ensure that it captures the informal sector.

The Head, Corporate Communications of PenCom, Peter Aghahowa, said to ensure seamless operations, PenCom, together with pension fund operators, have built robust information technology (IT) infrastructure that would support the initiative.

“The commission has also had engagements with informal sector groups such as the Nigerian Union of Textile, Garment and Tailoring Workers of Nigerian (NUTGTWN), a body consisting of self-employed tailors and garment workers; partner trade associations, non-governmental organisations (NGOs) and religious bodies in a bid to persuade them to subscribe to the micro pension plan”, he stated.

The Acting Director-General, PenCom, Mrs. Aisha Dahir-Umar, had said the implementation of the scheme would improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support.

According to her, the micro pension plan, when operational, would capture 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.

The Head, Research & Corporate Strategy, PenCom, Dr. Farouk Aminu, had, at a forum in Lagos, said, the commission was working on ensuring that the plan commenced as planned, noting that, the initiative would enhance the growth of pension assets in the country.
He stressed that the plan, has the potential to generate about N3 trillion to the pension assets, while it intends to mobilise about 12 million contributors within five years.

On benefits to be derived, Aminu, noted that self-employed people and workers in the informal sector would reap by participating in the plan, adding, the scheme, in addition to providing income for people at old age and inculcating a savings culture through highly protected and regulated investment, would afford them the opportunity to connect to other programmes of government while helping to finance infrastructure across the country.
“Subscribers could, as well, use the balance in their Retirement Savings Accounts (RSAs) as equity contribution for residential mortgages and support their businesses”, he said.

He stated that additional benefits to self-employed persons and informal sector workers include the cover provided under the pension protection fund (PPF).
According to him, under this arrangement, government would bridge shortfalls or financial losses from investment of their accumulated retirement savings and guarantee them minimum pension in retirement, irrespective of how much they are able to save before retiring.
He explained that the plan would be funded by an annual subvention of one per cent of monthly wage of federal government employees, annual levy on PenCom and pension operators as well as pension fund investment income.

Continuing, Aghahowa noted that the micro pension scheme had been made flexible for people to easily join, while the method of contribution is decided by the contributors, who are to choose whether to contribute daily, weekly, monthly, quarterly, and so on
Moreover, he said, anybody who is 16 years and above is eligible to join the scheme.
Deputy Zonal Head, South-west zone, PenCom, Mr. Sola Adeseun, said the micro pension plan has similar built in safety measures like the Contributory Pension Scheme (CPS).

According to him, the separation of duties in the management of pension assets, where the Pension Fund Administrators (PFAs) administer the fund and the Pension Fund Custodians (PFCs) keep custody of the fund remains one of the best safety valves in securing the funds
On her part, the President, Pension Fund Operators Association of Nigeria (PenOp), Mrs Aderonke Adedeji, said operators are anxious, to get the workers into the scheme, stressing that micro-pension remains one of the key focal points for development over the next 10 years.

He said the scheme would explore potential in the pension industry by persuading players in the informal sector to join CPS through the micro pension plan.
“When more people subscribe to the plan, it will increase the pension assets, hence, allowing pension fund operators to invest more funds for economic growth and development”.