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The National Pension Commission has said that it is working on plans to make the micro pension scheme attractive to self-employed professionals and other players in the informal sector.
This was stated during the Special Day event of the National Pension Commission at the Lagos International Trade Fair which was held at the Tafawa Balewa Square, Lagos Island on Friday.
The Pension Reform Act 2014 expanded coverage of the CPS to the self-employed and persons working in organisations with less than three employees.
The micro-insurance initiative seeks to cover low-income earners, high-income earners, and Small and Medium Enterprises in the informal sector.
The special day served as a public sensitisation on the inclusion of the informal workers and the self-employed under the Contributory Pension Scheme through the Micro Pension Plan.
Speaking with journalists at the event, the Head of the Micro Pension Department, PenCom, Dr Babatunde Alayande, explained that the Micro Pension Plan is not just for the informal sector, but also for self-employed professionals such as self-employed lawyers, town planners, engineers, among others.
He said “Part of what the commission is looking at is the need to modify the name, micro pension, so that everybody will know that this is beyond the informal sector.
The commission is working assiduously to make sure that there are incentives for people participating in this micro pension plan, especially, incentives for the informal sector.
“Part of the focus of the commission in this respect is the need to incentivise the informal sector participants with basic health insurance plans to encourage them, so they do not just bring money and save, but have other benefits.
“The commission has ensured that contribution into Micro Pension Plan is flexible in the sense that you can contribute daily, weekly, monthly or quarterly, depending on the type of work you are doing.”
He explained that the RSA contribution of the micro pension participant is split into two, comprising the contingency and the withdrawal parts.
“If you contribute any money, the money in your RSA will be split into two; 40 per cent will go into contingency, 60 per cent for pension. The 40 per cent was done that way because an average informal sector participant will need money occasionally, so the 40 per cent contingency function can be used by an informal sector worker to settle their needs as they arise,” Alayande asserted.
In his comments, the Head of Corporate Communications, PenCom, Ibrahim Buwai, said that micro pension is about financial inclusion, providing a platform for savings so that workers can have something to fall back on, especially in the time when they are no longer active.
He said, “The micro pension takes care of the peculiarity of this particular sector in the sense that we know that they have ongoing needs.
40 per cent of their RSA is for contingency, meaning if you have needs, emergency, to pay medical bills, children school fees, you can withdraw from the RSA.”
At the event, the acting Director-General of PenCom, Omolora Oloworaran, who was represented by the zonal head of PenCom, Southwest Zonal office, Akinsola Adeseun, noted that PenCom is in charge of regulation and supervision of the pension industry in Nigeria, ensuring that retirees get their pensions as at when due.
Speaking on the DG’s behalf, Adeseun said under the Contributory Pension Scheme, retirees are paid when due because the scheme is fully funded.
“The employer and employee both contribute. The employer contributes 10 per cent, while the employee contributes a minimum eight per cent, making 18 per cent altogether, and this goes into the Retirement Savings Accounts of the workers so that when they are retiring, the money is already invested, and it is ready for them to be taken out as their pensions at retirement,” he added.
At the event, PenCom had a raffle draw where participants won different prizes.
