Informal economy leaves millions outside pension net, expert warns

The co-founder of Globus Bank, Elias Igbinakenzua, has called for urgent reforms to Nigeria’s pension system, warning that millions of workers remain excluded from structured retirement savings because of the country’s vast informal economy.

Igbinakenzua made the call while delivering the keynote lecture at the 9th Professor Adebayo Akerele Memorial Lecture Series held at the University of Benin (UNIBEN). His lecture, titled “Financial Planning and Retirement Dilemma: The Focus of Nigerian Employees,” examined the challenges confronting workers in preparing for life after active service.

He observed that although Nigeria has a predominantly youthful workforce, a significant proportion of workers operate in the informal sector and remain outside the Contributory Pension Scheme (CPS), leaving them without any structured retirement savings.

According to him, the limited participation of informal sector workers in the pension system poses a serious threat to long-term financial security and could deepen old-age poverty if deliberate reforms are not introduced.

He stressed that expanding pension coverage beyond the formal workforce should become a national priority, insisting that every Nigerian worker, irrespective of employment status, should have access to a reliable and sustainable retirement savings scheme.

Igbinakenzua also advocated stronger enforcement of statutory pension remittances by employers, greater transparency and accountability in the management of Retirement Savings Accounts (RSAs), inflation-indexed wages, and improved financial literacy to enhance retirement outcomes for workers.

He argued that inadequate earnings, particularly within the academic sector, have significantly reduced employees’ capacity to accumulate meaningful retirement savings, noting that low salaries inevitably result in lower pension contributions and diminished retirement benefits.

The banking expert urged workers to begin retirement planning early by regularly monitoring their pension contributions, making voluntary pension savings where possible, investing in income-generating assets, and adopting sound financial planning practices to secure their future.

He maintained that addressing the structural weaknesses in Nigeria’s pension system, especially the exclusion of informal sector workers, is essential to ensuring financial security for retirees and building a more inclusive and resilient pension framework for the country.