Authorities at the National Pensions Commission (PenCom) are set to revolutionalise the nation’s pension landscape with the planned of micropension into the ongoing contributory pension scheme. The micropension which is to start January 2019 is targetted at the informal sector and is expected to function as a saving scheme for the low income earners.
Already, the Federal Government has approved the guidelines and frameworks for the commencement of micropension as structured by PenCom .The approval was said to have been communicated to PenCom by the office of the Secretary General of Federation (SGF) last week.
It would be recalled that the nation’s pension vault has swollen to well over N8 trillion with the bulk of the money been invested in infrastructure development among others.
But financial analysts are upbeat that the inclusion of the bulk of the nation’s informal sector into the pension basket through the micropension scheme will help swell the money available for long term investments while helping the self employed to plan for their retirement.
Confirming government’s approval of guidelines for the micropension scheme at this year’s media retreat organised by Pension Fund Operators Association of Nigeria (PenOp) for Pension and Insurance Correspondents in Lagos, the Head, Research & Corporate Strategy, PenCom, Dr. Farouk Aminu said with this approval, the commission is working on ensuring that the scheme commence in January, 2019, noting that this is a development that could enhance the growth of pension assets in the country.
He stressed that the micro pension plan is a scheme meant to capture people in the informal sector of the economy and expand the outreach of the new pension scheme.
Speaking at the event, Executive Secretary, PenOp, Ms. Susan Oranye said though the pension funds has grown to N8.2 trillion and the number of contributors has risen to about 8 million, the huge population of 160 million shows a lot of potential exist in the pension industry.
The micro pension scheme, she said, will explore the potentials in the pension industry by persuading players in the informal sector to join the Contributory Pension Scheme (CPS) through the micro pension plan. When more people subscribe to the plan, she said, it will increase the pension assets, hence, allowing pension fund operators to invest more funds for economic growth and development.
However, the Head, Corporate Communications, PenCom, Peter Aghahowa, said, the micro pension scheme is made flexible for people to easily join, while the method of contribution is decided by the contributors, who are to chose whether to contribute daily, weekly, monthly, quarterly, and so on.
Moreover, he said, anybody who is 16 years and above is eligible to join this scheme.He stressed that the regulator and operators are jointly working on the I.T infrastructure to ensure a seamless operation of the plan.
PenCom, had earlier said, the scheme, if it finally takes off, has the potential to generate about N3 trillion to the pension assets, while it intends to mobilise about 12 million contributors within five years.
Micro Pension plan, according to PenCom, is expected to capture self-employed people, especially those with irregular income, usually in the informal sector and are largely financially uninformed with limited or no access to financial services especially pension plan.
Section 2(3) of the Pension Reform Act, 2014 legal framework extends the coverage of the Contributory Pension Scheme to self-employed persons through micro pension scheme.
Pension has said its is working on the Information Technology (IT) infrastructure that will support the launch of the Micro Pension Plan.Its Acting Director-General, Mrs. Aisha Dahir-Umar, stated that the implementation of the Micro Pension Plan, is expected to improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement.
She maintained that the Commission expects that the implementation of the Micro Pension Plan will yield positive results for Nigerians and the Nigerian Pension Industry and that is however need to create more awareness about the plan.
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