‘70m Nigerians still locked out of micro-pension scheme’

Despite the huge funds expended on the micro pension initiative by the National Pension Commission (PenCom), it could not keep to its assurance of commencing the scheme by the end of 2017.

For this, about 70 million Nigerians in the informal sector remain locked out of the pension scheme, as the new plan does not allow informal sector players to participate in it.It was in an effort to capture self-employed individuals, especially those with irregular income, usually in the informal sector, who are largely financially uninformed and, with limited or no access to financial services especially pension plan that the idea of micro pension came about.

While the previous administration in PenCom seemed to have done a major work to ensure the micro pension scheme commenced as earlier planned, the exit of its former Director-General, Chinelo Anohu-Amazu, who championed the initiative seems to affected development in this area.

However, with assumption of office of the current Acting Director of the Commission, Aisha Dahiru-Umar, development in micro pension has been lethargic, with little or no action to continue from where the previous administration left it, thereby, casting a cloudy future on the initiative.

Industry sources revealed that the redeployment of the former Head of Micro Pension Department, Polycarp Anyanwu, who nurtured this concept to another department, may have rubbed the Commission of the needed experience in the micro pension department. As such, it may take some time for the new head of the department to fully integrate this concept before understanding where to start from.

Investigation revealed that staff, who are not knowledgeable on vital operations of the Commission were assigned sensitive responsibilities leading to the slowing down of activities in the Commission.

Moreover, information has it that players in the Nollywood industry and law profession, among others, who were expected to be under this scheme as well, objected to the name ‘Micro Pension’, calling for a change of name before they can subscribe to the scheme.

To this end, the scheme has hit a stumbling block and may require a total rebranding to attract more people to subscribe to it. A top official at the Commission, who spoke under the condition of anonymity, affirmed that there is no activity in place at the moment to kick-start the scheme. Another official said the lack of a substantive DG and Board is affecting the functions of the Commission. PenCom, had, in October 2016 maintained that it would release the micro pension guidelines in mid-2017, and commence the scheme by end of the year. This, vision was halted by the new leadership in the Commission.

According to the Commission, the micro pension scheme is expected to boost the pension contributors to 20 million Nigerians by 2019, and 30 million by the year 2024. It is also expected to contribute about N3trillion to the pension assets, while mobilising about 12 million contributors within five years.Underlining the challenges of the scheme, analysts in the industry, said although micro pension scheme is good for the country, it has its challenges.

These challenges, according to them, include insufficient awareness and negative perception towards it, modest financial literacy in the country, high cost of promoting awareness on the Contributory Pension Scheme (CPS), lack of reliable data on the informal sector and low buy-in by unions in the pension sector, and many others.

These challenges, they argued, must be addressed prior to the commencement of the scheme, adding that the micro pension scheme, when finalised would ensure improved standard of living for the elderly, guarantee the safety of funds, and may provide access to other incentives, such as mortgage facilities and health insurance. They listed other benefits to include flexible contribution remittances, the opportunity to make withdrawal prior to retirement, and the enhancement of financial inclusion and attainment of economic stability objectives.

They noted that the proposed micro pension scheme has the capacity to deepen asset accumulation in Nigeria, which will also provide the vital capital required for investment in critical sectors of the economy. Anyanwu had explained that the micro pension scheme directly addresses the breakdown of family support, averts old age poverty, as it engages and extends pension to the large working population that are self-employed.

He said PenCom’s target is the self-employed in various trades and professions in Nigeria – artisans, accountants, lawyers, mechanics, tailors, market men/women, hairdressers, architects, and engineers, and many others.Section 2(3) of the Pension Reform Act 2014, legal framework extends coverage of the Contributory Pension Scheme to self-employed persons through micro pension scheme.