Stakeholders in the Nigerian pension industry worried about the slow pace of informal sector enrolment into the country’s Micro Pension Plan (MPP) are considering workable models in Rwanda, Kenya among others.
They believe that they lack of critical incentives like co-contributions, free healthcare and insurance found in micro pension scheme in these other countries are making the Nigerian model unattractive to potential enrolees.
In this vein, the industry including the regulator, the National Pension Commission (PenCom) and the Pension Fund Administrators (PFAs) has recently suspended its planned awareness campaign to review the plan and find ways to make it more attractive to enrolees.
As at the end of March 2023, the MPP has enrolled 93, 225 participants in the informal sector, according to data from PenCom.
Rwanda government in October 2018 launched a social security scheme EjoHeza, a micro pension product in a few districts, targeting the informal sector and over 30,000 citizens enroled in less than two weeks with over Rwf 20 million in long-term savings.
EjoHeza provides attractive fiscal incentives including matching co-contributions and free term insurance cover for the first 3 years to motivate voluntary participation and persistency.
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Abdulqadir Dahiru, head of Corporate Communications Department PenCom speaking on the sideline of a one-day workshop organised by the Commission for journalist in Lagos said the Commission is aware of the slow pace in MPP enrolment and has decided that there will be need to review the product.
According to him, co-contribution in Rwanda and Kenya is what is making their own scheme attractive to the informal sector workers, but expressed concern on what such package will mean for the Nigerian government at a time like this.
“We have looked at the idea of co-contribution among other incentives, though it will be extra burden for government”.
He said, “a Joint PenCom/PenOp Committee will come up with pragmatic steps to successfully drive the implementation of the MPP and that we are already working”, he said.
Dauda Ahmed, head, Micro Pensions aPenCom said efforts are being made to institutionalize some incentives, which will help in attracting more of the informal sector to embrace the micro pension, which will ensure that those in the informal sector have pension arrangements, which will cater for their old age at retirement.
He said, as part of incentives to embracing micro pension, PenCom was working toward adopting a minimum health insurance for eligible MPP participants.
Ahmed stated that the commission was also engaging with labour unions, trade associations and several groups on embracing the plan.
Ahmed listed the challenges to the implementation of the plan to include; lack of awareness, mistrust about the pension system, absence of appropriate incentives and lack of financial literacy.
At the end of 2022 financial year, ARM Pension Managers Limited, Stanbic IBTC Pensions Managers Limited and Pension Alliance Limited were ahead of other pension fund administrators (PFAs) in Micro Pension Plan (MPP) enrolment.
Out of 89,327 registered enrolees (contributors), ARM Pension led with 22,580 members or 25.25 percent, while Stanbic IBTC Pensions followed with 14.962 or 16.75 percent.
Pension Alliance Limited and Tangerine APT Pensions Limited came third, fourth with 7,148, and 7,011 respectively, according to data from the National Pension Commission (PenCom).
The micro pension plan was launched in March 2019 as part of President Mohammadu Buhari’s second term campaign promise.
It was projected to increase the Retirement Savings Account (RSA) under the Contributory Pension Scheme (CPS) from 8.5 million at that time to 20 million in five years.
But four year down the line, the RSA has marginally increased to 10 million contributors with the MPP having just 93,225 RSA holders at the end of March 2023.
The MPP, which was established through the provisions of Section 2(3) of the Pension Reform Act 2014, aims at ensuring that the informal sector participants save towards their old age, as this category of workers constitutes a large percentage of the working population in the country.
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