The Micro Pension Plan (MPP) which was launched 3 years ago has enrolled just 72,846 Nigerians in the informal sector according to the National Pension Commission (PenCom) and it is a clear sign that the informal sector has yet to adopt the scheme as expected.
The MPP is an initiative aimed at expanding pension coverage and eradicating old-age poverty by providing financial services to the informal sector workers, such as self-employed individuals and employees of organizations with fewer than three employees who are not covered by the Contributory Pension Scheme (CPS). The Scheme was officially launched in March 2019.
Despite the benefits this scheme provides to its target audience, it is disheartening to learn that it is beset by a number of challenges, which have contributed to its low uptake when compared to the CPS, which registered over 10 million contributors and amassed N13 trillion in assets in just 17 years.
Mr. Dowda Ahmed, the Head, Micro Pension Department, PenCom, said the current number of contributors in the micro pension scheme, which is around 73,000, fell short of the Commission’s target. He was speaking at the annual media parley organized by the umbrella body of pension fund administrators, the Pension Operators Association of Nigeria (PenOp), in Lagos.
He described MPP as a long-term voluntary financial plan developed for the informal sector or organizations that are unable to participate in the CPS due to a lack of three employees, as required by the Pension Reform Act of 2014.
The Commission had expected more than what was recorded, according to Dowda, who also stated that the commission had engaged some stakeholders to ensure that the MPP had a favourable environment in which to grow.
Notwithstanding the modest uptake since its inception, pension operators are, however, still optimistic that the scheme will see massive growth in 2022, thanks to the introduction of powerful incentives that would encourage more participation.
According to the operators, these incentives, which include health insurance, term life insurance, and insurance to cover contributors’ job loss, were designed to entice a large number of Nigerians to join the system.