At the just concluded media retreat organised by Pension Operators Association of Nigeria (PenOp) stakeholders discusses strategies to launch the Micro Pension Initiative writes Yemisi Izuora
Following the fast collapsing family system in the country which has resulted in old age poverty, the National Pension Commission (PenCom) which regulates the pension sector with operators in the industry are finalising efforts to launch the Micro Pension Scheme.
The scheme identifies that so many Nigerians today suffer at old age because they did not plan for retirement.
Experts have identified serious health challenges, inactivity as things that go with old age leading to hunger, disease and untimely death.
Those who fall under this category are mostly self employed persons which include artisans, market men and women as well as other professionals in private practice.
There are also those big business operators with huge investments who suddenly lose their investments due to environmental associated crises, conflict or change in government policies.
Experts see these category of people as being unable to plan for retirement.
However, with the total failure of the Defined Benefit Scheme which represents the old pension scheme in which government pays retiring public officers pension, the new Pension scheme known as Contributory Pensions Scheme (CPS) is throwing up new opportunities for every Nigerian to become a pensioner.
The National Pension Commission (PenCom) is now leading a nationwide awareness program and is boldly supported by PenOp in the initiative to bring every Nigerians into the Pension Scheme.
The Micro Pension Scheme whose guideline is about to be unveiled will bring into the scheme, artisans, market men and women and other category of self employed persons in the country.
The Micro Pension operates under the same principle of the CPS which initially embraces the Public Servants and the Organised Informal Sector having 3 employees and above.
With the new initiative, individuals would now have the rare opportunity to become pensioners that was exclusive of public officers and lately informal sector.
PenOp chairman Eguarekhide Longe at a PenOp described the initiative as a strategy to lift the status of Nigerian entrepreneurs and keep them living their normal life even when age has incapacitated them.
Longe said Pension Fund administrators (PFAs) who are key operators in the industry would invest in the strategy and keenly support PenCom to realise the objectives of the scheme.
Nkem Oni-Egboma managing director Zenith Pensions Custodian Limited corroborated Longe’s assertion that the scheme when fully operational will deal with old age associated poverty.
Oni-Egboma described the scheme as a key social welfare system that will eliminate disease and painful exit of those who laboured during their active and youthful age but could not fend for themselves as a result of absence of family support.
Dapo Akisanya managing director AXA Mansard Pensions Limited expressed the hope that the scheme will boost life expectancy of Nigerians.
Akisanya observed that most Nigerians are usually agitated when they are close to retirement because of inadequate planning and the fear is more with those in the informal sector and other self employed persons.
How Would The Micro Pension Operate
Giving insight into the scheme at the forum, Polycarp Anyanwu Head Micro Pensions Department of PenCom said the scheme is expected to attract 20 million Nigerians by 2019 and 30 million by the year 2024.
Anyanwu who was represented by Mrs. Chioma Orjiakor explained that it is a Pension Industry strategic initiative designed to have inclusive and expanded coverage.
“It is a long term voluntary financial plan for the provision of pension and coverage to self employed persons working for organisation with less than 3 employees and informal sector workers” Anyanwa noted.
Under the law, the Pension Reform Act (PRA) 2014 expanded coverage of the CPS to the self-employed and persons working in organizations with less than 3 employees.
As this category of workers constitute the larger percentage of the working population in the country, there is no doubt that to achieve the Pension Industry strategic objective of covering 30% of the working population in Nigeria under the CPS by the end of 2024, all efforts are now on deck to extend coverage to this important segment of the Nigerian economy.
According to the Director General of the PenCom, Chinelo Anohu-Amazu, Due to their widely dispersed nature and generally low and irregular incomes, there is need to provide a pension plan that would meet their special characteristics. In this regard, the Micro Pension Plan initiative has been conceived within the context of an industry wide strategy to bring this class of workers on board.
In implementing this initiative, the informal sector has been segmented into three broad categories. The low income earners, the high income earners and the SMEs.
Each of these categories is going to be targeted with appropriate pension products and sensitization programmes that meet their peculiarities.
However, it is evident that a robust technological platform that would support the provision of customer services is necessary to effectively and efficiently register, collect contributions, provide Retirement Savings Account support, pay benefits and provide financial advisory services to this class of workers.
Coincidently, special mobile phone applications had been successfully implemented in some jurisdictions for financial transactions including provision of pension services to the self-employed and informal sector workers. The success stories of these applications drives the confidence that similar platform can be designed and implemented in Nigeria.
Oriental News Nigeria reports that the Commission had already commenced the sensitization of service providers and relevant regulators as well as the targeted workers in the informal sector with a view of creating the enabling environment and buy-in.
In addition, special function has been established in the Commission to drive the implementation of the Micro Pension Plan.