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Low financial literacy, inadequate technology, others slow pension plan

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Seven months after the commencement of the Micro Pension Plan (MPP), an initiative designed to attract over 20 million workers from the informal sector within five years, and add over N11 trillion to Nigeria’s pension asset, implementation of the scheme has been slow.

Although the scheme seeks to curb the rising rate of old-age poverty, by capturing self-employed Nigerians that are not enrolled on the Contributory Pension Scheme (CPS) into the nations’ pension basket, to grow the economy and drive financial inclusion, many factors have been identified as a setback to the scheme.

According to the National Pension Commission (PenCom), low financial literacy especially with the low-end strata, and the registration for the National Identification Number (NIN), as one of the criteria for MPP enrolment have become a major issue to the scheme.

Speaking at a retreat organised by Pension Fund Operators Association of Nigeria (PenOp), in Lagos, Head, Corporate Communication, PenCom, Peter Aghahowa, said participants on the MMP need to have some level of financial literacy.

According to him, MPP is a retail business, and requires one on one engagement with workers in the informal sector, to educate and enlighten them on how the scheme works and the benefits of enrollment.

He said: “For the uneducated, you need a little more work, and that is where we expect the operators to do more work. When you come with a product like this, people ask if it’s MMM. We have heard of many schemes where people’s monies were taken. With all that, it’s a bit difficult to push.

“The NIN registration, as one of the requirements for the registration on the MPP, is also a hurdle to people’s adoption of the scheme. Arrangements are being made to solve this because it has slowed down registration for us.

“You go to the market to register people for the micro pensions, and one of the requirement is the NIN, the market woman tells you that she does not know what is NIN.

“We are now in collaboration with the National Identity Management Commission (NINC), such that when the operators go out to register people, they can collect all the information needed by NINC to generate the new number for their prospective clients.”

He stressed that when plans are concluded, the arrangement with NINC will enable operators to generate a NIN for their clients, just as they generate PIN numbers for PenCom, saying it would boost participation.

Aghahowa noted that inadequate technology platforms to support MPP have also posed a challenge to the scheme.

He said: “With Fintechs and what technology is doing in the financial sector, the more automated it is, the easier it will be. Implementation has been going on well but automation will boost participation.

“A lot is being planned. There is an Unstructured Supplementary Service Data (USSD) end that is in the works and a whole lot of shared service arrangements are on the way to make it easy to have platforms that will support pension arrangements.”

In her remarks, Managing Director, Leadway Pensure PFA, and President, PenOp, Mrs. Ronke Adedeji, said the pension transfer window would kick off in June 2020, noting that the issue of NIN is affecting the speed of contributors’ data cleaning for the exercise to commence.

She said the proposed date of commencement is tentative; although Pension Fund Administrators (PFAs), and PenCom are working hard to meet the set date.

She said the exercise depends on the ability of both the PFAs and the regulator, to fine-tune issues relating to total cleaning of contributors’ data, which has been a setback to the transfer window over the years.

The pension transfer window is an avenue that allows contributors on the CPS who are not satisfied with the services of their PFAs to migrate to another one in accordance with the Pension Reform Act (PRA) 2014.

Council Member, PenOp and Managing Director, UBA Pension Custodian, Bayo Yusuf, disclosed that PenCom and the PFAs have been engaging on the matter, just to ensure that the June 2020 date was realistic.

Meanwhile, many dissatisfied contributors of CPS have been looking forward to the commencement of the transfer window to enable them to migrate from their existing PFA.

Some of the reasons they gave for desiring a change are the forceful selection of specific PFAs for them by their employers contrary to the PRA 2014. This made some contributors select PFAs that was not their choice.

Also, some contributors complained that their annuity funds have not been transferred to their insurers, where they want to buy the annuity from an insurance company in place of programmed withdrawal.


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