AIICO Pension has unveiled an initiative that will allow Micro Pension Plan (MPP) to be bought for third parties, a move that will boost financial inclusion by increasing the number of informal sector participants in Nigeria’s voluntary pension scheme.
“Gift A Pension” will enable people to reward their personnel and domestic staff by gifting them an MPP, and contributing on their behalf regularly, the Pension Fund Administrator (PFA) said at the product launch in Lagos Friday.
“At AIICO, we believe everyone deserves a pension whether they work in the formal sector or the informal sector,” said Bankole Ekundayo, corporate communications head at AIICO Insurance Plc.
According to Ekundayo, AIICO observed that a lot of people could not afford to have a pension and decided to come up with an initiative that allows workers in the formal sector become responsible for funding the micro pension account of their loved ones and domestic or personnel staff who are not in formal employment.
“…we are very confident this initiative would deepen the financial coverage because beneficiaries of the product have sponsors in the formal sector,” said Ekundayo.
In 2017, the International Monetary Fund (IMF) estimated the size of the informal in Nigeria at about 65 percent of the economy.
This meant millions of self-employed Nigerians and those in unprotected jobs did not have the safety nets their counterparts in the formal sector enjoyed, especially access to the contributory pension scheme.
President Muhammadu Buhari in March 2019 launched the MPP to reach the informal sector thus encouraging the financial stability of millions of Nigerians and financial inclusion.
The government also set a target to attract as much as N3trillion and reach as many as 3o million people through the micro pension scheme.
“Many people had hoped micro pension would be the next big thing because, at that time, less than 10 percent of the working population had pension accounts,” said Babatunde Fajemirokun, MD/ CEO AIICO Insurance Plc. “The experience, however, has been totally different.”
The uptake of micro pension has been slow on the back of a slowly recovering, low-wage economy.
Also, because the micro pension scheme is voluntary, it has become a secondary consideration for many Nigerians in the informal sector some of whom are domestic workers, farmers, and merchants.
The problem of information, ease of access, education has also played a role in the rate of enrollment for pension products.
“As a result, we have had to examine the environment and look for a niche entry. Micro pension for us is research and development being a long-term investment,” said Fajemirokun.
