Aisha Dahiru Umar
Ebere Nwoji writes on the importance of the micro pension scheme
One of the remarkable reforms instituted
by the former president Olusegun Obasanjo’s administration was the
introduction of the Contributory Pension Scheme (CPS), which replaced
the hitherto non-...
funded Defined Benefit Pension scheme.
The CPS, which is funded in nature with
the employee contributing eight per cent to his Retirement Savings
Account (RSA) and his employer contributing 10 per cent every month gave
workers in both public and private sectors, especially the formal
sector workers, future hope but left a gap in non -coverage of the
informal sector workers.
However, 16 years after the creation of
the institution of the CPS, president Muhammadu Buhari, gave a boost to
the scheme through the launch of the micro pension scheme, with informal
sector operators who were not covered by the CPS as the prime target.
At the launch of the micro pension scheme, the president had said the initiative was to address the exclusion of millions of traders, farmers and other entrepreneurs from the different pension programs in existence.
At the launch of the micro pension scheme, the president had said the initiative was to address the exclusion of millions of traders, farmers and other entrepreneurs from the different pension programs in existence.
He said it was part of his administration’s plan to ensure the inclusion of all Nigerians in the basic services.
Disclosing the position of his administration regarding the well-being and future of informal sector operators in Nigeria, president Buhari had said, “In the past three years, we provided grants, concessionary loans and technical support through our SME clinics to farmers, traders and SMEs. We have seen lives positively change because of these initiatives.
“The micro pension plan is the natural next step. The program guarantees that when these hard working citizens retire, they can still live in dignity and comfort.
Disclosing the position of his administration regarding the well-being and future of informal sector operators in Nigeria, president Buhari had said, “In the past three years, we provided grants, concessionary loans and technical support through our SME clinics to farmers, traders and SMEs. We have seen lives positively change because of these initiatives.
“The micro pension plan is the natural next step. The program guarantees that when these hard working citizens retire, they can still live in dignity and comfort.
“At this juncture, I would like to
encourage trade associations, unions, non-governmental organisations and
other stakeholders in the informal sector of our economy to join hand
with the government and the pension industry to enlighten their members
and the general public on the benefits of the micro pension plan,” he
said.
Going by federal government’s plan, the
initiative is expected to cover an estimated 80 million people working
in the informal sector of the economy, including market women, the
National Union of Road Transport Workers, members of textile, garment
and tailoring associations, tricycle operators and Okada riders.
Others targeted for capture under the
scheme are butchers associations, workers in the movie and performing
arts industry, mechanics and other workers in the automotive industry
and single professionals like lawyers, accountants among others.
The Acting Director General National Pension Commission (PenCom), Mrs Dahir-Umar, recently said the commission is targeting about N3 trillion and 20 million contributors through the scheme.
The Acting Director General National Pension Commission (PenCom), Mrs Dahir-Umar, recently said the commission is targeting about N3 trillion and 20 million contributors through the scheme.
According to her, the micro pension
plan, has been well simplified to suit the target contributors. For
instance, she said under the initiative, 40 per cent of the amount
contributed could be accessed by contributors for contingency purpose
while the balance of 60 percent would be set aside for retirement
benefit.
She explained that while contributors
could start drawing from their 40 per cent contributions after three
months of making the initial deposit, the 60 per cent balance could only
be accessed at the age of 50 or during retirement.
The PenCom boss projected that the successful implementation of the micro pension scheme has the potential of reducing poverty level by 85 per cent.
The PenCom boss projected that the successful implementation of the micro pension scheme has the potential of reducing poverty level by 85 per cent.
“This event is remarkable because it
unveils a unique financial product, which democratises the savings
culture in Nigeria in a systematic and efficient manner.
“The product also perfectly aligns 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.
“Our objective is to ensure efficiency
and effectiveness in service delivery as well as transparency and
accountability in the administration of the product by licensed pension
operators,” she had said.
To drive the scheme, PenCom and the pension fund operators, said they have developed information technology to support the micro pension distribution plan.
To drive the scheme, PenCom and the pension fund operators, said they have developed information technology to support the micro pension distribution plan.
On the benefit of the scheme to the
targeted contributors, the pencom boss said, “The implementation of the
micro-pension plan will improve the standard of living of the informal
sector participants at retirement and reduce dependence on extended
family for support at retirement.
“The 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.”
Section 2(3) of the Pension Reform Act, 2014 legal framework extends the coverage of the CPS to self-employed persons through the micro-pension scheme.
Section 2(3) of the Pension Reform Act, 2014 legal framework extends the coverage of the CPS to self-employed persons through the micro-pension scheme.
According to her, additional benefits to
self-employed persons and informal sector workers include the cover
being provided under the Pension Protection Fund.
She explained that under the
arrangement, the government would bridge shortfalls or financial losses
from the investment of their accumulated retirement savings and
guarantee them minimum pension in retirement, irrespective of how much
they were able to save before retiring.
She also said the plan would be funded
by an annual subvention of one per cent of the monthly wage of federal
government employees, the annual levy on PenCom and pension operators as
well as pension fund investment income.
On their part, Pension Fund Operators said there is no doubt that the initiative was the future of the pension sector and the economy in general.
On their part, Pension Fund Operators said there is no doubt that the initiative was the future of the pension sector and the economy in general.
The operators said they are strategising
to reap the gains of the scheme and give hope to self- employed
Nigerians and small scale business operators who ordinarily would not
test the benefits of pensions savings a chance to save for the future
and escape old age poverty.
Long before the formal launch of the
micro pension scheme, many PFAs were expected to have calibrated their
internal processes and operations to accommodate the new group of
retirement savings account holders.
For instance, Stanbic IBTC Pension
Managers Limited, which currently controls N2.8 trillion assets out of
the total N8.7 trillion total pension assets in the country, recently
demonstrated its leadership position in the industry through the launch
of its own micro pension scheme tagged, “Game Plan. Retire Well.”
The PFA at the media launch of its micro
pension plan said it considered the pension reforms necessary to
maintain the strength and depth of the country’s CPS, adding that part
of its engagement with the media was not only to intimate and educate
them on the micro pension plan but to also demonstrate its readiness for
the micro pension plan.
Some of the engagement platforms Stanbic
IBTC Pension Managers had instituted to continue to engage stakeholders
include town hall meetings and public awareness programs.
The PFA, said it has a dedicated 24/7 customer care line that can
engage its clients in English and the four major Nigerian languages –
Pidgin, Hausa, Igbo and Yoruba.
Stanbic IBTC Chief Executive Officer,
Eric Fajemisin, explained that the micro pension plan was meant to
insulate those not covered in the formal sector of the economy as well
as low-income earners against old-age poverty.
“The micro pension plan will equally help in deepening asset accumulation in the country,” he added.
According to him, the scheme would provide the crucial capital required for investment in critical sectors of the economy.
“As an initiative designed to cover an estimated 70 per cent of Nigeria’s working population in the informal sector, the scheme offers enormous benefits to the society, regardless of challenges associated with its seamless implementation,” he said.
According to him, the scheme would provide the crucial capital required for investment in critical sectors of the economy.
“As an initiative designed to cover an estimated 70 per cent of Nigeria’s working population in the informal sector, the scheme offers enormous benefits to the society, regardless of challenges associated with its seamless implementation,” he said.
According to him, among its benefits is
improved standard of living for the elderly, safety of funds and access
to other incentives, such as reduction in their dependency on the
younger generation, flexible contribution remittances, the opportunity
to make withdrawal prior to retirement and the enhancement of financial
inclusion in the country.
Fajemisin explained that with offices in
over 200 locations across the country and its electronic platform to
engage the technology minded clients via internet or the Stanbic IBTC
mobile app, it was clear that Stanbic IBTC Pension Managers is truly
ready to onboard the Micro Pension customers
The PFA also pledged its readiness and commitment to contributing its quota through its ‘Game Plan – Retire Well’ campaign.
According to the PFA, the effort is aimed at sensitising and stimulating the informal sector not covered by the current CPS to secure their buy in into the pension scheme.
According to the PFA, the effort is aimed at sensitising and stimulating the informal sector not covered by the current CPS to secure their buy in into the pension scheme.
Speaking on the campaign, Fajemisin
said, “it is our call out to stakeholders to secure their future and
reinforce the need to save and plan for retirement, irrespective of the
nature of their jobs or the profession they may find themselves in.
“It is all about taking a decision today by signing up for a retirement plan, making the right move now towards a secure future or simply put, having a game plan,” he said.
“It is all about taking a decision today by signing up for a retirement plan, making the right move now towards a secure future or simply put, having a game plan,” he said.
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