President Muhammadu Buhari has unveiled a Micro Pension Plan for people operating in the informal sector of the economy, even as he promised to halt the rot in the nation’s pension system.
The President, while unveiling the pension plan on Thursday in Abuja, noted that those in the informal sector needed to be captured in the plan just like those in the formal sector.
The Micro Pension Plan targets the significant majority of Nigeria’s working population who, incidentally, operate 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 including market women, members of the National Union of Road Transport Workers, and members of textile, garment and tailoring associations.
Others are tricycle operators and Okada Riders Associations, butchers associations, workers in the movie and performing arts industry, mechanics and other workers in the automotive industry and single professionals like lawyers, accountants and many others.
Buhari said his administration understood the importance of the pension industry, adding that this was why the Micro Pension Plan was conceived so that operators in the informal sector would have something to fall back on when they retire from active service.
He added that despite its lean resources, the Federal Government would continue to support the National Pension Commission in order to successfully implement the initiative.
As part of the government’s support to the initiative, he directed that the Financial System Strategy 2020 should support the plan through its financial inclusion programme.
Buhari said that in the last three years, his administration had provided grants, technical support and loans to small businesses, noting that through such interventions, the lifestyle of many people had changed for the better.
Having achieved so much with making the business environment-friendly for businesses, the President said it was imperative to have a social protection plan in form of pension for traders, farmers, and tailors, among others, operating in the informal sector of the economy.
Earlier, the acting Director-General, PenCom, Aisha Dahir-Umar, disclosed that up to N6.51tn of total pension assets had so far been invested in government securities.
She added that this represented 73 per cent of the total pension assets.
The DG explained that another N95.31bn was invested in infrastructure, while N7.19bn went into the subscription of the Federal Government’s Green Bond.
Explaining the Micro Pension Plan, she said that under the plan, 40 per cent of the amount contributed could be accessed for contingency purpose while the balance of 60 per cent would be set aside for retirement benefit.
She said while contributors could start drawing from their 40 per cent contribution after three months of making the initial deposit, the 60 per cent balance could only be accessed at the age of 50 during retirement.
She said through the implementation of the Micro Pension Plan, it was expected that the level of old age poverty would be reduced by 85 per cent.
The DG said, “This event is remarkable because it unveils a unique financial product, which democratises the savings culture in Nigeria in a systematic and efficient manner.
“The product also perfectly aligns with the current social empowerment programmes of the Federal Government, as it seeks to ensure, in the long-term, the sustainability of the benefits of the empowerment programmes for the participants, who may seize this opportunity to save for their old age.
“Our objective is to ensure efficiency and effectiveness in service delivery as well as transparency and accountability in the administration of the product by licensed pension operators.
“With the formal launch and subsequent successful implementation, the Micro Pension Plan is expected to significantly expand pension coverage to greater number of Nigerians and further generate additional long-term funds for economic development.
“The Commission would collaborate with relevant stakeholders to sensitise and enlighten the target participants and the public on the features and benefits of the plan.”
The Secretary to the Government of the Federation, Mr Boss Mustapha, expressed optimism that the initiative would expand pension fund coverage to the informal sector.
He said that the unveiling of the plan by the President would make a greater number of Nigerians to expand the pool of investible funds available to the economy.