The newly introduced Micro Pension Plan (MPP) for the informal sector of the Nigerian Economy has taken into considerations peculiarities of the sector to ensure fluid participation, the National Pension Commission (Pencom) has explained.
Peter Aghahowa, head corporate communications, Pencom who spoke with business a.m said that the considerations entails flexible contribution by the self-employed and easy access to contingent withdrawals. According to him, this will aid the successful implementation of the scheme due to its specific design for the informal sector.
“In the informal sector we have people that have incomes coming in at different patterns. So the way it has been designed, is that when they key into the plan they have the flexibility of contributing weekly, daily, quarterly or monthly, basically as it suits the nature of their business.” Aghahowa said.
- More on data subject access requests
- One-off vs. Staggered Payment: Should retirees have access to 100% lump…
- CBN says N477bn disbursed to MSMEs across Nigeria in QE-style interventions
- Nigeria’s DMO puts country’s public debt at N35trn by H1 ‘21
- Nigeria needs clear policy actions in ship breaking practice
He added that “because it is a voluntary scheme, and for people to be able to appreciate the savings for a later time when they cannot work, we are conscious of the fact that from those doing business, liquidity is very key. We are also conscious of the fact that people may need cash quickly and even though the monies were meant for pension, there is room for contingent withdrawals.
The way it works is that 40 percent of what you are saving can be assessed at any time, however 60 percent is locked in for the purpose of pension, because that is the whole idea.
The Pencom is targeting to reach about 43 percent of the 69 million work force in the country which represents an estimated 88 percent of Nigerian workers that lack pensions and safety nets for their old age.
“The goal of the commission is to achieve coverage of 30 million people in the informal sector by 2024,” a statement from the commission noted.
The MPP will be open to Nigerian residents (including foreign nationals resident in Nigeria) who are 18 years and above and are self-employed with a business registered as a company, partnership or enterprise, including persons belonging to trade, professional, cooperative or business associations; or operating in the informal sector and working with or without formal written employment contracts; or employees in organisations with 3 staff or less.
Highlighting other benefits of the MPP, the National Pension Commission noted that it will; aid steady income in the future, reduce the rate of poverty in the country, generate fair returns on investment and grant access to deceased’s benefits by the named beneficiary.
On what it entails to be a contributor to the plan asides being self-employed, guidelines obtained by business a.m from the commissions website showed that the following requirements have to be met: opening of a Retirement Savings Account (RSA) with any Pension Fund Administrator (PFA). Make contributions into RSA. Request for RSA statement from PFA. Update RSA information on request. Appoint a Next of Kin. Choose the platform for making contributions. Decide to make contingent withdrawals. Choose the mode of accessing pension (Programmed Withdrawal or Annuity) from Micro Pension Plan. Demand for adequate customer service as provided in the Consumer Protection Framework issued by the Commission.”
The commission further noted that on contributions to the scheme, it has to be made in Nigerian currency which is the Naira.
Pencom advised that provided the contributions will be made in any given year the Micro Pension Contributors (MPC) may make their contributions daily, weekly, monthly or as may be convenient to them.
Also, every contribution shall be split into two comprising 40 percent for contingent withdrawal and 60 percent for retirement benefits, adding that the amount of contribution shall be dependent on the MPC’s pension aspiration and financial capacity.
Additionally, contributions can be made by cash deposit, electronically, through any payment instrument/platform or other financial service agents approved by the Central Bank of Nigeria.
Pencom said it is the duty of the PFC to immediately advise the PFA upon receipt of value of contributions. “Upon receipt of notification from the PFC, the PFA shall immediately notify the Micro Pension Contributor.”
Both PFAs and PFCs are also required to inform the Economic and Financial Crime Commission of any single lodgment of N5 Million and above.
On charges, Pencom’s MPP guidelines revealed that PFAs are to charge a maximum administration fee of N80 for contributions of N4,000 and above while a maximum administration fees of N20 shall be charged on RSAs for contributions below the sum of N4,000.
Muhammadu Buhari, Nigeria’s President in his address at the official launch of the MPP noted that after his administration’s efforts in the past three years, towards providing grants, concessionary loans and technical support through SME clinics to farmers, traders and SMEs, the Micro Pension Plan is the natural next step.
He said having seen lives positively change because of these initiatives, the MPP guarantees that when these hard working citizens retire, they can still live in dignity and comfort.
He encouraged Trade Associations, Unions, Non-Governmental Organizations and other stakeholders in the informal sector of the Nigerian economy to join hand with the Government and the Pension Industry to enlighten their members and the general public on the benefits of the Micro Pension Plan.
The president also pledged the Federal Government’s support to the National Pension Commission to ensure a successful roll-out of the product by the pension operators for the benefit of the target participants.
Deloitte, a Nigerian audit and financial advisory firm noted in an emailed statement that “this is a laudable initiative as we move away from an era when workers retire from the informal sector of the economy, with nothing to fall back on, after they have lived an active life.”
Frontpage November 28, 2019