Launched in 2019 by then-President Muhammadu Buhari, Nigeria’s Micro Pension Plan (MPP) aimed to extend pension coverage to workers in the informal sector, constituting over 87.9% of the working-class population. However, four years down the line, the initiative faces significant challenges.
Despite the intention to bring professionals like accountants and lawyers, individuals in private practices, artisans, mechanics, welders, and small business operators into the pension net, the MPP struggles with low numbers of contributors and micro pension assets under management.
Statistics reveal that only 105,455 subscribers have enrolled since inception, contributing N435.61 million over four years, averaging N108.9 million annually from 23,363 registrations. The slow pace prompts concerns among experts who argue that regulators and operators have not done enough to raise awareness and educate the masses about the plan’s benefits.
Mr. Ehimeme Ohioma, representing the Director-General, highlighted that contingent withdrawals by MPP contributors amounted to N30.3 million. Despite challenges, there is optimism that the MPP can contribute to economic growth by providing a reliable income source for retirees, ultimately reducing dependence on others in old age.
Challenges and Opportunities
Mr. Dauda Ahmed, the Head of the Micro Pensions Department, identified several implementation challenges, including lack of awareness, mistrust, insufficient incentives, low financial literacy, inadequate service delivery, increased poverty, slow adaptation, benefit payout issues, and complex document requirements during registration.
Experts like Samuel Inyang and Usman Suleiman draw parallels between the MPP’s slow growth and the challenges facing the Nigerian economy. They emphasize the need for flexibility in the scheme and increased investment in repackaging, publicizing, and promoting the MPP.
Operators acknowledge the scheme’s underperformance but express plans to engage the government for added incentives, similar to practices in countries like Rwanda and Kenya, where governments supplement individual contributions to encourage participation.
Mr. Aguche Aguda, CEO of the Pension Funds Operators Association of Nigeria (PenOp), reassures that industry efforts are underway to enhance the MPP. Plans include increased media publicity, awareness campaigns, and government engagement to boost participation, especially among those in the low-income bracket.
Guided by the PRA 2014, the National Pension Commission (PenCom) introduced the MPP to include workers in the informal sector. As of 2022, a survey indicated that Nigeria has approximately 89.65 million micro, small, and medium enterprises (MSMEs), employing 87.9% of the nation’s labor force.
While challenges persist, the MPP remains a crucial step towards extending pension services to workers in the informal sector, aiming to secure their financial well-being during retirement.
Source: Daily Independent
