PenCom & PFAs List Challenges of Micro Pension Implementation in Nigeria
Pension Fund Operators Association of Nigeria (PenOp) recently held a “Micro Pension Open Day” in Lagos, Nigeria, bringing together regulators, pension operators, service providers, and stakeholders, to discuss the challenges, opportunities, and solutions for a brighter future.
At the event, the operators highlighted the challenges they are facing in their efforts towards the implementation of the Micro Pension plan initiative to the targeted market in Nigeria. The operators, however said, in the mist of the challenges, increased public awareness and review of the guidelines among others things, will go a long way in ensuring implementation.
Speaking at the event, the operators said the challenges were of two folds from the informal sector workers and Pension Fund Administrators (PFAs).
From the informal sector workers they highlighted the challenges as lack of awareness, mistrust about the pension system, absence of appropriate incentives such as collateral for Micro finance and lack of financial literacy.
From the PFAs, they pointed out the challenges as short term perspectives base of the Micro pension plan and perceived associated costs, inadequate awareness campaigns, slow adoption of shared services arrangements by pension fund operators, poor service delivery, weak economic indices occasioned by inflation as well as increased poverty levels.
The Head, Micro Pensions Department National Pension Commission, Dauda Ahmed, who highlighted the challenges, said they have impacted negatively on the implementation efforts of both the Pension Fund Administrators (PFAs) and the National Pension Commission (PenCom).
He listed efforts made so far to push the Micro pension scheme to the targeted market as collaborations and stakeholders’ engagements through engineering leaderships of associations, unions cooperatives, civil society organisation and the media. He also said PenCom made further effort in renewing awareness campaign drive by in print, electronic and social media platforms among other efforts.
He said with these efforts, a total of 97,591 contributors have so far registered into the Micro pension scheme as at May 31, 2023 while a total of N435,607,515,14 has been contributed. He said out of this, contingent withdrawals stood at N30,243,070.69 by 150 Micro pension contributors while a total of 587 contributors have converted from Micro pension to formal Contributory Pension Scheme.
He also said, to achieve the set objectives of the Micro pension scheme there was need for increased enlightenment and public awareness campaign by the regulator and PFAs, review of the MPP Guidelines, further drive of the development of incentives, development of industry shared services platform, enhanced service delivery among others.
Presenting a paper at the event titled “Current Financial Inclusion Landscape”, research associate at Enhancing Financial Innovation and Access (EFlnA), Chioma Nwaiwu said Nigeria had planned to have 95% of its population financially included by 2024 but only about 50.5% of adults currently use formal financial services in Nigeria. She said, while overall financial inclusion continues to grow incrementally, progress has been too slow to meet national financial inclusion strategy targets.
She also said there was need for increased uptake and usage of pensions to achieve the Sustainable Development Goals’ targets, which were poverty reduction, good health and well-being, decent work, economic growth and reduced inequalities. According to her, pension reduces the risk of poverty among retirees, out of job persons as well as informally employed persons and provides financial resources for healthcare during retirement
She also said pension incentivise savings and support economic stability, observing that Pension reduces inequality by extending social protection benefits to marginalised and underserved population.
She noted that there was a critical mass to scale up Micro pension in the informal sector of Nigerian economy pointing out that 49.8 million Nigerians were in the informal sector. She noted that most informal sector workers plan to rely on their savings, children or businesses in retirement.
The Chief Executive Officer of Pension Fund Operators Association of Nigeria (PenOp) gave a closing remark at the end of the 2023 Micro Pension Open day where he stated that comments, feedback, and suggestions had been taken note of by PenOp and the Pension Fund Administrators (PFAs) as they are committed to harnessing the vast potential of the Micro pension market. Additionally, he commended PenCom’s unwavering dedication to ensuring the triumph of the Micro Pension Plan (MPP) and emphasized on better collaboration between stakeholders and the Pension Industry.
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