The Federal Government has plans to extend the pension scheme for artisans, lawyers, accountants among others. The plan is to extend beyond the formal public and private sectors. The National Bureau of Statistics underscores the government’s conviction that the informal sector remains a critical part of the economy. The sector which accounts for over 70% of the working population has been uncovered by structured pension managers, according to statistics.
Through the National Pension Commission, the Federal Government, with the planned introduction of a micro pension scheme, will bring more Nigerians under the pension’s umbrella, thus ensuring that save for the rainy day. The micro pension scheme is expected to kick off by the second quarter of next year as a pilot phase.
Going by Section 2(3) of the Pension Reform Act 2014 which extended coverage of the Contributory Pension Scheme (CPS) to self-employed persons, the Pension Reform Act 2014 established the legal framework for micro pension.
37.6 million of Nigeria’s 93.5 million adult population, operate within the informal sector of the economy, according to the National Bureau of Statistics demographic. A further breakdown shows that 8.6 million of the adult population earn their income from the formal sector, 49.4 million are under 33 years, 58.7 million own a mobile phones and 21.5 million have no education.
In a paper titled: “Understanding Micro Pension Scheme: Features, Prospects And Expectations”, presented at workshop organised for finance, insurance, labour and business editors in Calabar, Cross River State. PenCom Head, Micro Pensions Department, Polycarp C.N. Anyanwu, described micro pension as an initiative that exists for the provision of pension coverage to self-employed individuals.
Anyanwu, commented “to commence the pilot phase, we are targeting 250,000 contributors to enrol within 6 months, test ICT technology to ensure adequacy, test run the guidelines and framework, test the ease of operations, registration, contribution, withdrawal of savings portion and embark on capacity building for staff and operators. The possible challenges from the scheme however are socio-cultural inclinations, documentation challenges, low level of financial literacy, lack of confidence in government, irregular income inflow, low level of ICT literacy, associated transaction costs and low level of education.”
The micro pensions in Nigeria cover three strata – the lowest, middle and high income earners. The micro pension scheme is an offshoot of the pension industry five-year strategic plan to expand the CPS coverage to 20 million contributors by 2019, adding that the pilot phase of the scheme would be targeting 250,000 enrolments within six months. The trade unions and associations are expected to assist by introducing the scheme to their members ahead of the kick-off of the pilot phase.