As part of efforts to deepen the pension industry, the Federal Government has announced that modalities for increasing pension awareness in the country will take off fully in January 2019.
The announcement was made during the Pension Fund Operators Association of Nigeria (PenOp) retreat organised for members of the National Association of Insurance and Pension Correspondents (NAIPCO) in Lagos.
In a paper presented at the retreat, Head, Research & Corporate Strategy, PenCom, Dr. Farouk Aminu, said the commission was working to ensure that the scheme commenced fully in January 2019. He said the development would help deepen pension assets in the country.
Aminu said the Federal Government approval for the guidelines was communicated to the National Pension Commission (PenCom) through the Secretary General of the Federation (SGF) last week.
“The commission is currently working on the ICT infrastructure to support the implementation and to ensure effective take off of the plan, confirming that the micro pension will be voluntary and that there will be a lot of flexibility in the plan to allow it to work.
“By that, the contributors would decide modalities for contribution whether daily, weekly, monthly or quarterly, as is convenient to him. The guidelines made provisions for the contributor to have access to 40 per cent of his contributions, while 60 per cent will remain in pension. Also, the contributor cannot withdraw that until retirement,” he said.
According to him, there will be no bottleneck in collecting the money when the retiree wants it because PFAs will handle all approvals unlike the normal one that all approvals will come from PenCom.
He said 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.
PenCom had earlier projected that the scheme, when it finally takes off, has the potential to generate about N3 trillion to the pension assets, while PenCom 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.
PenCom’s Acting Director General, Mrs. Aisha Dahir-Umar, stated that the implementation of the Micro Pension Plan was expected to improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement.
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The Executive Secretary, PenOp, Ms. Susan Oranye, said though the pension fund has grown to N8.2 trillion and the number of contributors has risen to about 8 million, the huge population of over 160 million shows a lot of potential exist in the pension industry.
She explained that the micro pension scheme would explore the potential in the pension industry by persuading players in the informal sector to join the Contributory Pension Scheme (CPS) through the Micro Pension Plan. More people subscribing to the plan, she said, will increase the pension assets, allowing pension fund operators to invest more funds for economic growth and development.
However, the Head, Corporate Communications, PenCom, Peter Aghahowa said the regulator and operators are jointly working on the IT infrastructure to ensure seamless operation of the plan.