Micro Pension Scheme: Ideal retirement plan for Nigeria’s informal sector workers

For every Nigerian in an employed or self-employed establishment, having accrued savings and pension contribution intact after retirement is their dream. But unfortunately, many have had their hopes and aspirations of living in comfort after working years dashed away.

The undeserving life after retirement has caused many to live in financial distress leading to depression, illness, hypertension and untimely death.

But to create succour for workers in the informal sector of high, low and middle-income, the government provided a Micro Pension Scheme that guarantees workers financial independence and quality life after retirement.

“We will ensure all hard working Nigerians in the private sector, both formal and informal, can retire without fear,” President Muhammadu Buhari said at the launch of Micro Pension Scheme in March 2019.

“We have already started on this journey. We must all come together to ensure these reforms are fully implemented and their positive impact is felt by the rightful beneficiaries.’’

Micro Pension Plan was established in accordance with the Provisions of Section 2(3), Pension Reform Act (PRA) 2014 of the National Pension Commission (PenCom). The pension plan is aimed at ensuring that members of the informal sector save towards old age as similarly done in India, Kenya and Ghana.

The pension plan is designed to expand the coverage of pension contributors by an estimated 30 million people by the year 2024. This category of workers constitutes a large percentage of the working population in the country.

To implement this initiative, PenCom segmented informal sector into three broad categories of low-income earners, high-income earners and the small and medium scale enterprises (SMEs).

Each of these categories will be targeted with appropriate pension products and sensitization programmes that meet their various peculiarities.

Since its launch, the plan has proven to be an indication that the Nigerin Government is committed to ensuring that Informal sector workers are also covered under the Contributory Pension Scheme (CPS).

Implementation of this plan is projected to reduce old age poverty drastically because the informal sector worker would have saved for retirement while active at work. This will aid economic development and macro-economic stability through investment in infrastructure and financial markets.

It will also enhance pension coverage and improve the Gross Domestic Product. And in case of contributor’s death, contributions will be passed to the next of kin.

PenCom expects that the implementation of the Micro Pension Plan will yield positive results for Nigerians and the Nigerian Pension Industry.

Without a doubt, the Micro Pension Plan, would improve the standard of living of the informal sector worker at retirement and reduce dependence on extended family for support after active work life.