It has been 2 years after the Federal Government launched the Micro Pension Plan for the informal sector in 2019 and only 62,463 artisans have opened Retirement Savings Accounts with Pension Fund Administrators.
Statistics obtained on Monday from the National Pension Commission on ‘Micro pension registration and contribution’ showed that 62,463 artisans had embraced the Micro Pension Plan as of the end of December 2020.
According to the Commission, the artisans have a cumulative contribution of ₦89.68m. The Commission stated that in the fourth quarter, 20 PFAs registered 3,663 contributors under the Micro Pension Plan.
“In the same vein, a total sum of ₦25,024,528.08 was remitted to the RSAs of the contributor within the review period,” it said.
It earlier disclosed that as of the end of third quarter of 2020, “Cumulatively, a total of 58,800 informal sector workers had registered under the MPP and contributed a total sum of ₦64,662,323.38 from inception in March 2019 to 30 September 2020.”
The Pension Reform Act, which came into effect in 2004, provides a contributory arrangement in which both the employer and employee contribute into the workers’ RSAs.
However, the CPS was only opened to the formal sector since inception, until the Federal Government officially extended it to the informal sector in March 2019.
As part of the financial inclusion objectives of the government, the PFAs were instructed to ensure the development of the micro pension plan to enable the artisans and other self-employed workers to plan for their financial future.
According to the MMP, the informal sector contributors will be allowed to withdraw at least 40 per cent of the contributions in their RSAs before retirement. This is, however, different from what is obtainable with the formal sector in which contributors could only access 25 per cent of their RSA balance after four months of being out of paid employment or at retirement.
However, to start withdrawing the 40 per cent contribution, the artisan must have contributed to his RSA for a minimum of three months. PenCom stated, “Every contribution shall be split into two, comprising 40 per cent for contingent withdrawal and 60 per cent for retirement benefits.
“The contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto.
“The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion.” The remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years, it added.