Worries over lingering Micro-pension implementation

The unveiling and implementation of the micro-pension scheme was supposed to have taken off as early as the first quarter of this year.

After series of delay in the past, the micro-pension plan was finally inaugurated in January; to be followed closely with implementation.

However, the January date did not take effect even after the National Pension Commission (PenCom) had prepared the ground for it and the guidelines released to both stakeholders in the industry and members of the public months earlier.

In what appeared like an effort to save lost ground, the scheme was eventually inaugurated by the Federal Government with promises that operators would hit the ground running so as to accommodate about 70 million Nigerians currently operating in the informal sector and are not captured in the pension net under the Contributory Pension Scheme (CPS).

Two months after the inauguration in March, the enthusiasm around the scheme appears to be slowing, as the Pension Fund Administrators (PFAs) are yet to commence proper marketing and registration of potential target group(s).

Although a recent report quoted a top operator in the industry as saying that the PFAs were doing their job as regards the micro-pension plan, the poor pace is, however, building an aura of discouragement on the expected momentum as soon as the scheme was inaugurated.

According to him, the process of registering the workers has been smooth and progressive, adding that the operators are capturing the data of workers pending when the full registration commences, when they would be issued their Pensioner Identification Numbers (PINs)

While unveiling the plan, President Muhammadu Buhari, said: “Today, millions of traders, farmers and other entrepreneurs in various industries are completely excluded from the different pension programmes in existence.

 “If you recall, one of the three core pledges of this government is the creation of a diversified and inclusive economy. This can only be achieved by creating an enabling environment for farmers, entrepreneurs and people in other professions.

“In the past three years we provided grants, concessionary loans and technical support through the Small and Medium Enterprises (SME) clinics to farmers, traders and SMEs.

“The micro pension plan guarantees that when these hardworking citizens retire, they can do it in dignity and comfort.”

Buhari encouraged trade associations, unions, non-governmental organizations and other stakeholders in the informal sector to join hands with the government and the pension industry to enlighten their members and the general populace of the benefits of the plan.

Besides, Buhari added: “We are working tirelessly to sanitize some of the rot within the pension system we inherited. “This government remains committed in resolving all pension issues and payments, despite the lean resources of government. We will ensure that every hardworking Nigerians in the private sector, formal and informal can retire without fear.”

While conceiving the micro-pension idea, PenCom proposed that it would boost pension contributors to 20 million from the current figure of 8.48 million contributors by 2019 and 30 million by the year 2024.

Findings had earlier revealed that although majority of those targeted were oblivious of the scheme before the inauguration, they, however, expressed willingness to key into it as soon as the PFAs commence the implementation in earnest.

 While unveiling the scheme in Abuja, the Acting Director-General, National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar, said the plan perfectly aligned with the current social empowerment programmes 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.

According to her, “this is the first time such window of opportunity is being opened to self-employed Nigerians and those working in the informal sector, to participate and enjoy the benefits inherent in the Contributory Pension Scheme.

“As you might have observed, the CPS has been very impactful in Nigeria since the commencement of its implementation in 2004. The formation of long term domestic capital, represented by the over N8.74 trillion worth of pension assets as at last January, belonging to 8.46 million formal sector participants, is slowly but surely changing Nigeria’s financial landscape. This, by extension, is also transforming the course and pace of our socio-economic development.

Apart from securing a good future for the workers, Dahir-Umar had said that the enlistment of the informal sector into the pension savings net would also boost the quantum of available long term investible funds that will galvanise national development efforts.

 She said the scheme was designed to fit the peculiarities of these informal sector groups, stressing that the National Pension Commission 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.

“Thus, a prospective 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,” she added. The commission had organised sensitisation workshops and enlightenment programmes on CPS for informal sector associations and unions as part of the strategy of driving pension coverage in the sector.

It also had meetings with Medium Enterprises Development Agency of Nigeria (SMEDAN) where an agreement was reached to set up a joint Technical Committee that would work towards the effective implementation of the micro-pension plan.

Section 2(3) of the Pension Reform Act, 2014 extends coverage of the CPS to self-employed persons through micro pension scheme.

The commission said it was working assiduously to enroll 250,000 contributors within six months of the commencement of the initiative. The scheme is an offshoot of the pension industry five-year strategic plan to expand the coverage of the CPS to 20 million contributors by the end of this year.

 The commission is also targeting the self-employed in various trades and professions in Nigeria such as artisans, accountants, lawyers, mechanics, tailors, market men/women, hair dressers, architects, engineers among others.

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“We have reviewed the implementation of micro pension in other jurisdictions like Kenya and Ghana; formulated guidelines and framework on micro pension; consulted licensed Pension Industry Operators and enhanced its information and communications technology capacity to accommodate the scheme,” it added.

As part of the arrangement, the contributors in this segment may be expected to make contributions daily, weekly, monthly or as may be convenient for them, as the plan is open to individuals who are 15 years and above with legitimate source of income and resident in Nigeria.

In the same vein, every contribution made shall be split into two comprising 25 per cent for contingent withdrawal and 75 per cent for retirement benefits just as the contributions shall be made by cash, electronically or any payment platform approved by the Central Bank of Nigeria (CBN).

The regulator noted that a contributor shall be eligible to access pension upon attaining the age of 50 years or on health ground in accordance with the law, adding that a contributor shall also be entitled to guaranteed minimum pension, provided they satisfy the provision of Section 84 (1) of the Pension Reform Act (PRA) 2014.

Worries over lingering Micro-pension implementation

SOURCENiyi Olaoye
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