The micro pension plan is targeting about 30 million people, including low-income and high-income earners by 2024, National Pension Commission (PenCom) Acting Director-General, Mrs Aisha Dahir-Umar has said.
The Acting DG, who spoke at a seminar organised by Business Today Online in Lagos, said the Commission is also targeting the Small and Medium Scale Enterprises (SMEs).
She said this category of workers constitutes a large percentage of the working population in the country.
She disclosed that due to the peculiarities of the informal sector, the micro pension plan would be flexible, safe, convenient and simple.
Mrs Dahir-Umar explained that the commission aims to introduce the micro pension plan in accordance with the Provisions of Section 2(3) of the Pension Reform Act (PRA) 2014.
Highlighting the benefits of micro plan, she said that over time, old age poverty will decrease with the introduction because the informal sector worker would have saved for retirement while active.
She said additional savings from micro pension would aid economic development and macro-economic stability through investment in infrastructure and financial markets.
She added that it would also enhance pension coverage and improve Gross Domestic Product (GDP); while contributions will pass to the next of kin in case of contributor’s death.
She, however, noted that despite the benefits of the plan, there are a few envisaged challenges that may hinder the smooth implementation of the micro pension plan in Nigeria.
The Acting Director-General listed the challenges as financial illiteracy and low incomes in the country.
She said: “Some of the low-income earners, who constitute the third segment of the informal sector, are mostly illiterate and thus, inexperienced with formal financial transactions and institutions. Unlike the high-income earners that can deposit in lump sum, most low-income earners are daily wage workers and as such are unable to deposit large amounts.
“The Micro Pension Plan refers to an arrangement for the provision of pension to the self-employed and persons operating in the informal sector. The Micro Pension Plan is also aimed at low-income earners who are often financially illiterate and usually have limited or no access to financial services. It is also the sought-after solution to old age poverty as can be found in jurisdictions like India, Kenya and Ghana who have successfully implemented a Micro Pension Plan”.
Speaking on the way forward, she said the Commission expects that the implementation of the micro pension will yield positive results for Nigerians and the pension industry.
Meanwhile, Mrs. Dahir-Umar has explained the reasons for suspending the recruitment of 41 workers into the agency.According to her, the exercise which was scheduled to resume on May 2 last year, was suspended due to anomalies and irregularities discovered in the process.
She said 41 candidates had been given employment letters after an interview which was cancelled over some irregularities.
“Half of them were asked to resume on May 1 and the rest in June. The Federal Character Commission (FCC) gave certificate of “no objection” for the interview. The next step was for the Commission to request for Certificate of Compliance to give out letters of employment following the interview. While that was been awaited, the executive of PenCom was sacked. The DG as at the time quickly distributed the letters, without the certificate from FCC.
“Meanwhile, the FCC in its letter authorising the interview had given two conditions. That the Commission must collect the required certificate before giving out employment letters and must use that recruitment to balance the lop-sidedness of staffing in the Commission.
“When I resumed in April last year, our Human Relations department gave me a letter from the FCC suspending the resumption of those recruited. Based on that letter, I asked HR to meet with the FCC to find a way forward. The FCC advised that the exercise be suspended, that those affected should be informed and that they should be considered in subsequent recruitment exercises.
“Every recommendation was followed to the later. We did try to get the National Assembly House Committee on Fededral Character to reconsider its stand through the House Committee on Pension and the Senate Committee on Establishment but both failed. Instead, a letter of reminder was sent to us on the suspension. The Commission was also invited and warned not to accommodate the new recruits due to irregularities of the exercise.
“Every recommendation was followed to the later. We did try to get the House Committee on Federal Character to reconsider its stand through the House Com-mittee on Pension and the Senate Committee on Establishment. Both failed.”