…As Contributions Hit N435.61m
A major financial inclusion advocate, Enhancing Financial Innovation & Access (EFInA), has restated the need for informal sector practitioners to embrace opportunities in Micro Pension Plan.
The advice came on the heels of most informal sector employees’ lack of interest in the scheme set up in 2019 to take care of their welfare after retirement from active work life.
This is just as contributions under MPP have peaked at N435.61 million.
The gradual input of the scheme to the economy shows that more Nigerians, both in the formal and informal sectors of the economy, are sustaining their confidence in the new pension scheme that was set up in 2004, with the Micro Pension Plan, however, coming on board in 2019.
Speaking at a one day sensitisation programme organised by Pension Fund Operators Association of Nigeria (PenOp) on Friday in Lagos, a research officer with EFInA, Chioma Nwaiwu, said most informal sector workers planned to rely on their savings, children or businesses in retirement.
She said while 14 per cent of adults under the age of 55 have not made financial plans for old age, only 29 per cent of adults under the age of 55 plan to primarily rely on pension in old age
According to her, “how will you ensure that you have money to meet your needs when you are old and cannot work?”
Identifying some of the challenges militating against the scheme, she said lack of awareness was a major barrier to uptake and usage of micro pension.
According to her, “94 per cent of adults without pensions are unaware of the service. Sixty two per cent of individuals with pension have not heard of micro pensions –lost
opportunity for testimonial marketing.
“One-third of adults who have heard of
Micro pensions have a pension account. Nigeria lacks wide variety of distribution channels. For Micro pension, distribution is concentrated in a
handful of PFAs/PFCs as well as agents
“Mobile network operators are a key distribution channels that is missing in Nigeria.”
Speaking further on the lack of understanding of the distinct features of the micropension product, she said irregular income and not having enough money were the most frequent
reasons given for not making regular
“Of those not making regular retirement savings, nearly half cite irregular income as a reason. This indicates that pension products with flexibl contribution and timing could be useful in reaching those without pensions. More efforts needed to educate the populace on the features, reliability and safety of Micro pensions,” she said.
Speaking earlier on the success story the Director-General, National Pension Commission (PenCom), Aisha Umar-Dahir, said the Micro Pension scheme was launched in 2019 by former President Mohammadu Buhari as part of the Commission’s efforts to expand pension coverage to workers in the informal sector.
She said the theme of the event “Challenges,
Prospects for Growth, and Deepening Financial Inclusion in Nigeria” was apt as it aligns with the Commission’s resolve to expand pension
coverage to all workers, especially those in the informal sector through the Micro Pension Plan (MPP).
According to her, “this event is designed at bringing together key players in the Micro Pension Plan initiative such as Pension Fund Administrators (PFAs), Pension Fund Custodians (PFCs), services providers, industry experts and the media to interact on developments, challenges and strategies to ensure the successful implementation of the MPP.
“I wish to inform you that the Commission has recorded some modest success in its efforts to extend pension coverage to the informal sector.
As at April 2023, the total number of registered Micro Pension participants stood at 95,045 with total value of the MPP Fund of N435.61 million. It is, however, clear that more needs to be done to achieve the desired outcome of extending coverage to workers in the informal sector with an estimated 50- 75 million workers.
“Currently, MPP implementation challenges include low awareness level,.limited contribution remittance channels; lack of adequate incentives to encourage participation and absence of innovation to enhance efficiency around registration, pension contribution remittances and benefit payments.
‘I, therefore, urge us all to leverage on this platform to discuss and explore ways to overcome the hurdles associated with the
implementation of the MPP.
‘We would like to extend our gratitude and appreciation to all that have.made it possible for this event to become a reality. Thank you for your attention, and I hope you enjoy the rest of the day’s programme.”
She noted that the MPP initiative would promote economic growth by providing a stable source of income for retirees and reduce old-age dependency, thereby causing a reduction in the poverty rate.
“The Plan also aims to encourage a savings culture among low-income earners and self-employed individuals in the country,” she said.
Also in his contribution, the Chief Executive Officer, PenOp, Mr. Aguda Oguche, described the industry as one for everybody, stressing that there was need for all to improve it.
He said: “PenCom is focused and committed to the best for MPP. PenCom is challenging us on innovation and new products. The potential is huge for micro pension. We are partnering with banks, mobile network providers, retail network providers as suggested.
“There is prospect for MPP, we invite all stakeholders to engage more to double the present record of the Plan.”