The National Pension Commission (PenCom) says that the inauguration of the Micro Pension Plan (MPP) would ensure a significant 85 percent reduction in old age poverty in Nigeria.
PenCom’s Director-General, Aisha Dahir-Umar, said this at the official inauguration of the plan in Abuja, Nigeria’s capital city.
Dahir-Umar added that the launch of the plan was a first time window of opportunity opened to self-employed Nigerians and those working in the informal sector to participate and enjoy benefits in the Contributory Pension Scheme (CPS).
According to her, the MPP was a win-win situation as it aligned with the current social empowerment programmes of the Federal Government.
The plan sought to ensure, in the long term, the sustainability of the benefits of the employment programme for participants, who might seize the opportunity to save for old age.
The plan is targeting the majority of Nigeria’s working population already operating in the informal sector.
Participants in the pension plan are expected to be informal sector workers such as market women, members of the National Union of Road Transport Workers (NURTW), members of the Textile, Garment and Tailoring Associations, as well as members of the Keke Napep and Okada Riders Associations.
Butchers, mechanics, performing artistes, lawyers, and accountants are among some of the other informal sector workers expected to participate in the pension plan.
She also said that the MPP should significantly expand pension coverage to a greater number of Nigerians and generate additional long term funds for economic development.
Dahir-Umar explained further that access to accumulated contributions by contributors would be flexible, seamless, and facilitated by technology through varied payment platforms.
She added that a prospective MPP contributor would be required to open a Retirement Savings Account (RSA) with a Pensions Fund Administrator (PFA) of his or her choice:
“The contributor may make contributions daily, weekly, monthly, or as convenient to them.
“Every contribution shall be split into two, comprising 40 percent for contingent withdrawal and 60 percent for retirement benefits.
“The contributor may, based on need, periodically withdraw the total or part of the balance of the contingent portion of the RSA, including all accrued investment income.
“The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion.
“The remaining balance in RSA shall be available to the contributor upon retirement or upon attaining the age of 50 years.’’
She said that the commission had established a separate department dedicated to the supervision of all matters relating to MPP, adding that its objective was to ensure efficiency, effectiveness, transparency, and accountability in service delivery.
The commission will continue to collaborate with relevant stakeholders to enlighten the target participants and the public on the features and benefits of the micro pension plan.
The PenCom Director-General further explained that the commission had issued a robust set of guidelines on the MPP, pursuant to the provision of Section 2, Sub-section 3 of the Pension Reform Act 2014.
Meanwhile, the pension fund operators have, in pursuant to the guidelines, put in place appropriate structure and trained manpower to ensure adequate coverage and provision of excellent customer service to the MPP participants, she noted.
As for the Secretary to the Government of the Federation, Mr Bose Mustapha, the inauguration of the plan was another milestone in the development of the country’s pension system.
Mustapha said that the Federal Government adopted the contributory pension scheme because of its obvious advantages, its sustainability, and its robust institutional framework, which could eliminate corruption.
He said though the implementation of the micro pension plan would not increase pension assets within a few years, it would increase the quantum of pool of investible funds available to drive economic growth.
Mustapha said that the guidelines issued by PenCom for the MPP established a uniform set of rules for operational modalities of the micro pension plan and defined roles and responsibilities of all stakeholders.