Nigeria’s pension industry will need to create the needed awareness and education to bring in an estimated 36.8 million currently excluded from any form of financial services, to realise its 80 million informal sector access target.
This has become important because the informal sector will need to understand the benefits of financial services and key into it, to be able to align with micro pension contributions for retirement.
According to Efina financial inclusion report for 2018, of the total adult population that is 18 years and above put at 1.7 million, 36.8 percent, are financially excluded.
The report also notes that significant gains have been made at the end of 2018 in formal inclusion, as excluded population declined by 4.8 percent from 40.1 million to 36.6 million.
Experts at Efina also note that out of the 40 percent financial inclusion target for pension industry in 2020, 8 percent has been achieved, showing huge potential that needs more education and enlightenment.
President Muhammadu Buhari at the launch of the Micro Pension Scheme in Abuja recently said, “The scheme targets the significant majority of Nigeria’s working population who, incidentally, operates in the informal sector.”
With an estimated 80 million people working in the informal sector of the economy, the Micro Pension Plan would take care of participants from various informal sector workers – market women, members of the National Union of Road Transport Workers, and members of textile, garment and tailoring associations, among others.
Aisha Dahir-Umar, acting director-general, National Pension Commission (PenCom), said with the formal launch and subsequent successful implementation, the micro pension plan was expected to significantly expand pension coverage to greater number of Nigerians and further generate additional long-term funds for Nigeria’s economic development.
She said, “The Commission would collaborate with relevant stakeholders to sensitise and enlighten the target participants and members of the public on the features and benefits of the micro pension plan.
“The Commission had extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements. The product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts. Access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms.”
According to Misbahu Yola, managing director/CEO, FCMB Pensions, in an exclusive interview with BusinessDay, micro pension itself is a totally different sector because it is going to be dealing with small savers, the self-employed and the informal sector – like the artisans, that is, people that are not in the organised private sector or public sector.
“I feel everything depends on regulation, and PenCom has released a framework on how that is going to be done and there is lots of work that remains outstanding. Part of what we are working on is on how we can identify people because you need identity to be able to operate effectively in that space,” Yola said.
He stated that when you collect money from people to open accounts for them, how do you identify them, how do you register them, how do you collect money from them and how do you pay them when they want to get paid, “you know they are not like you and me? Yes, they have their various artisans group but you still must find a way of identifying and grouping them.
“So for me, there are still a lot of final issues that must be put in place because you need to identify the kind of people that you are dealing with.”
The National Pension Commission had issued a guideline on micro pension plan pursuant to the provision of Section 2(3) of the Pension Reform Act 2014.
The Guideline spelt out detailed legal, institutional and operational frameworks for the administration of the product by licensed pension operators from the point of enrolment to the point of accessing benefits from the pension account by participants.
