Shared services by Pension Fund Administrators (PFAs), digital innovation and healthcare incentives have been seen will drive micro pension access and adoption.
According to experts who shared their thoughts on what can be done to meet industry pension penetration target of 2.2 million by 2027, said PFAs must drive the process at reduced cost through shared services.
These they noted would not only increase access but also drive sustainability, being that micro pension business is long-term and requires patience.
Dauda Ahmed, head, Micro Pensions at the National Pension Commission (PenCom) said as at 31st May 2023 Micro Pension Plan(MPP) has enrolled 97,591with total contributions standing at N435, 607,515.14, while it’s hoped would grow to 2.2 million by end of 2027.
Dauda said, adoption of minimum health insurance incentive for eligible MPP participants is key in achieving success of micropensions in Nigeria.
He said adoption of shared services is work in progress, as four service providers have been identified to facilitate registration and remittance of contributions.
According to him, in the Commission’s renewed focus on MPP for 2023 to 2027, plans are on to create product and market development unit, facilitate innovation within the industry (digital financial services), creation of a consumer protection department, enhanced service delivery and protection of rights as well as reviewed fees on micro pension fund.
Access to Financial Services in Nigeria (EFInA) said increased uptake or usage of pensions are needed to achieve the SDGs targets and improve livelihoods for Nigerians, stating that pensions reduce the risk of poverty among retirees, out of jobs persons as well as informally employed persons.
”It provides financial resources for healthcare during retirement; pensions incentivises savings and support economic stability, and reduces inequality by extending social protection benefits to marginalised and underserved populations.”
The agency notes that delivering long-term pension products and motivating the clients to buy through the same intermediary will require massive sensitisation of both the channel as well as the clients.
To encourage participants, they recommend improved value proposition, new risk profiles, bundling and exit or pay out options to make product attractive to informal sector awareness and financial literacy.
It also recommends increase use of technology to tackle the infrastructural and cost barriers in serving the target group across the product life cycle; enhance business models collaboration with other players, for instance cooperatives, GiG platform workers and other aggregator platforms, leverage open digital platforms like WhatsApp and USSD.
Others are partnerships to expand footprints (telcos, bank agents; consider opening the market to a wider range of innovative providers, business models and solutions.
EFInA also recommend regulation for innovation, calling for opening the market for a range of innovative providers, business models and solutions that have the potential to expand pension coverage in Nigeria while protecting against key risks.
EFInA therefore recommends that increased value proposition of pension, including expanding the use-cases to meet critical developmental goals as well as bundled services.
“Concerted industry-wide effort to leverage technology, particularly in tackling the infrastructural and cost barriers in serving the target group; regulation for innovation, that is open the market for a range of innovative providers, business models and solutions that have the potential to expand pension coverage in Nigeria while protecting against key risks”