‘Only 26% of Nigerian workers subscribed to pension, health insurance’

The National Bureau of Statistics (NBS) has said that just about 26.3 per cent of Nigerian workers have a pension plan and health insurance policy across the country in 2023.

A pension plan is an employee benefit that requires an employer to contribute to a pool of funds set aside for a worker’s future retirement benefit while Health insurance is a type of contract in which a company agrees to pay some of a consumer’s medical expenses in return for payment of a monthly premium.

The 26.3 per cent was revealed in the latest Nigeria Labour Force study published by the NBS, which claimed that Zamfara State recorded the highest number of employees with health insurance and pension at 65 per cent while Abia had the lowest number of wage employees with health insurance and pension plan at just 3.9 per cent.

The report also stated that the percentage of employees entitled to either pension or health insurance schemes in Nigeria accounted for 26.3 per cent.The low number of employees with pension and health insurance plans stemmed from the high number of informal sector workers in Nigeria.

According to the study, about 92 per cent of Nigeria’s employed population is engaged in informal employment. Recall that the National Pension Commission (PenCom) stated that only 25 states including the FCT had enacted pension laws on the CPS, while six are preparing to pass the law.

Acting director-general of PenCom, Omolola Oloworaran, explained that six states had already adopted the contributory defined benefits scheme (CDBS). According to Oloworaran, only eight of the 25 states are fully implementing the CPS and have enacted laws.

The acting director-general further said the pension fund assets under the scheme had risen, with total assets under management soaring to N20.79 trillion as of July 2024.

“Pension fund assets under the Contributory Pension Scheme, CPS, continue to grow, with total Assets under management soaring to ₦20.79 trillion as of July 2024,” she said.

“We are pleased to note the steady remittance of contributions by States, with over N236.7 billion remitted by States between January 2020 and the second quarter of 2024.

“It will interest state governments to note that one of the significant benefits of adopting the CPS is access to accumulated pension funds for infrastructural development through the issuance of state bonds.

“Indeed, five states, including Lagos, Niger, Osun, Ekiti and Delta, have successfully issued state bonds that were subscribed by pension funds, for example, Lekki-Ikoyi Bridge in Lagos.” Oloworaran said the commission is committed to ensuring that all retirees from public and private sectors receive their retirement benefits without delay.

The informal sector consists of businesses defined by open entry and exit, complete market knowledge, and market forces operating without formal regulations, like a competitive market.

These enterprises typically lack formal organisational structures, experience low and inconsistent earnings, face business insecurity, and do not offer social benefits like pensions for employers or employees.

According to the International Monetary Fund (IMF) reports recently said that Nigeria’s informal sector contributed 57.7 per cent to the country’s GDP in 2022, highlighting its significant role in the economy.

However, millions of Nigerians in this sector remained excluded from traditional pension systems, leaving them vulnerable to poverty in retirement.
Employee benefits like health insurance, pensions, yearly leave, and work-life balance initiatives play a crucial role in enhancing job satisfaction, which can lead to higher productivity and employee loyalty.