PenCom to enrol 60 million informal workers in pension scheme

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Director-General, PenCom, Mrs Omolola Oloworaran

The National Pension Commission has revealed plans to integrate over 60 million informal workers into the national pension scheme.

The Director-General of PenCom, Mrs Omolola Oloworaran,  disclosed this during a one-day capacity-building workshop by the Labour Writers’ Association of Nigeria, themed “Challenges of Nigeria’s Economic Downturn: Survival Options for Workers”, which was held in Lagos recently.

Oloworaran said, “By expanding pension coverage to this underserved sector, the initiative seeks to provide greater financial security and sustainable retirement options for workers in the informal economy to avert the pressing issue as millions risk retirement poverty.”

Data from the National Bureau of Statistics revealed that the informal sector represented over 65 per cent of Nigeria’s workforce.

Yet, only about 12 per cent of the working population has any form of retirement savings, leaving millions vulnerable to old-age poverty.

Oloworaran, stated, “The nation is undergoing some economic challenges, even when we look at it from a global perspective, these challenges abound globally, although every country will have its peculiar challenges.

“For us at PenCom, the contributory pension scheme has always been supporting workers because they are the bedrock of support that helps the contributory pension scheme,” she stated.

Despite the economic challenges, she noted that the pension fund assets that were under management had continued to grow.

“Today, pension assets are about N20.8 trillion as of July 31, 2024, about 10.4 million registered pension contributors.

“There is a provision under the Pension Reform Act that has a resolution for the informal sector. It is evident that the Nigerian economy is largely populated by the informal sector, so the Pension Act has a provision whereby the informal sector workers and those who work in employment that can employ less than three people can participate in the scheme through the micro pension plan,” Oloworaran stated.

She mentioned that the micro pension plan was especially useful during tough economic times, as it allowed informal sector workers with savings to withdraw up to 40 per cent of their contributions as a contingent portion to address immediate financial needs.

“Assuming an informal worker has joined the micro pension scheme over the years and come to periods like this, where there are economic challenges, the worker will have something to fall back on, and that is one of the lofty objectives of the contributory pension scheme to ensure that informal sector workers to fall back on, especially when they are no longer able to work,” Oloworaran added.

PenCom launched the Micro Pension Plan in 2019, aimed at informal workers, such as artisans, market traders, and small business owners, providing a flexible, contribution-based pension scheme.

According to the Nigeria Labour Force Statistics Report Q2 2023, the informal employment rate in Q2 2023 was 92.7 per cent.

As of 2023, only about 70,000 informal workers are registered in the scheme, representing a small fraction of the total population in need of pension coverage.

Also, a survey by the Lagos Business School found that over 60 per cent of informal workers were unaware of pension schemes available to them.

Meanwhile, the International Labour Organisation estimated that 93 per cent of employment in Nigeria was informal, with 95 per cent of women and 90 per cent of men in this sector.

It added that about 50 per cent were self-employed, while the rest worked for small or medium informal businesses.

The General Secretary of the Federation of Informal Workers of Nigeria, Gbenga Komolafe, told The PUNCH that the government often focused its social protection instruments on workers in the formal sectors of the economy.

He noted that there were existing social security frameworks in Nigeria, such as the Micro Pension Plan, Workmen Compensation Act, and National Health Insurance Scheme, which practically excluded the informal workers.

“It is imperative to swiftly amend the Micro Pension Plan, introducing government contributions that complement the savings of informal workers in the pension fund. This will help mitigate the adverse impact of inflation on the savings of these workers in the Pension Fund,” Komolafe said.

The FIWON scribe added that it was crucial for the Department of Social Security and Cooperative Development at the Federal Ministry of Labour and State Governments to provide significant financial and technical support for the growth of FIWON cooperatives and the cooperative movement in Nigeria.

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