President Muhammadu Buhari launched the Micro Pension Plan yesterday in Abuja, ably supported by Mrs. Aisha Dahir-Umar, Acting Director-General, National Pension Commission (PenCom).
The event was witnessed by various relevant associations and trade groups in the country to herald the emergence of a pension plan for Nigerians working in the informal sector of the economy.
Below is the welcome address by Mrs. Aisha Dahir-Umar, Director-General of PenCom at the event:
- It is my honour and privilege to welcome Mr. President and other distinguished personalities to this historic event for the formal launch of the Micro Pension Plan. This is the first time such window of opportunity is being opened to self-employed Nigerians and those working in the informal sector, to participate and enjoy the benefits inherent in the Contributory Pension Scheme.
- As you might have observed, the Contributory Pension Scheme has been very impactful in Nigeria since the commencement of its implementation in 2004. The formation of long term domestic capital, represented by the over N8.74 trillion worth of pension assets as at January 2019, belonging to 8.46 million formal sector participants, is slowly but surely changing Nigeria’s financial landscape. This, by extension, is also transforming the course and pace of our socio-economic development. For instance, N6.51 trillion, representing 73% of the total pension assets is invested in Federal Government Securities issued to finance various activities of Government. Thus, in the area of infrastructure alone, the pension funds invested about N95.31 billion in the N200 billion Sukuk issued by the Federal Government. Similarly, out of the N10.67 billion Green Bond issued by the Federal Government, pension funds invested N7.19 billion. Consequently, we believe that the enlistment of the informal sector into the pension savings net would boost the quantum of available long term investible funds that would galvanize national development efforts.
- Today’s event is, therefore, remarkable because it unveils a unique financial product, which democratizes the savings culture in Nigeria in a systematic and efficient manner. The product also perfectly aligns with the current social empowerment prgrammes of the Federal Government as it seeks to ensure, in the long term, the sustainability of the benefits of the empowerment programmes for the participants, who may seize this opportunity to save for their old age.
- Your Excellency, other distinguished guests; Micro Pension Plan targets the significant majority of Nigeria’s working population who, incidentally, operate in the informal sector. Participants are expected from various informal sector workers including market women, members of the National Union of Road Transport Workers (NURTW), members of Textile, Garment and Tailoring Associations, Keke Napep and Okada Riders Associations, Butchers Associations, workers in the Movie and Performing Art industry, mechanics and other workers in the automotive industry and single professionals like lawyers, accountants and many others.
- Micro Pension Plan is designed to fit the peculiarities of these informal sector groups. The National Pension Commission had extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements. The product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts. Access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms.
- The National Pension Commission has issued a robust Guideline on Micro Pension Plan pursuant to the provision of Section 2(3) of the Pension Reform Act 2014. The Guideline spelt out detailed legal, institutional and operational frameworks for the administration of the product by licensed pension operators from the point of enrolment to the point of accessing benefits from the pension account by participants. Already, the licensed Pension Fund Operators have, pursuant to the Guidelines, put in place appropriate structure, infrastructure and trained manpower to ensure adequate coverage and the provision of excellent customer service to the Micro Pension Plan participants.
- Thus, a prospective Micro Pension contributor is required to open a Retirement Savings Account (RSA) by completing a physical or electronic registration form with a Pension Funds Administrator (PFA) of his/her choice. The contributors may make contributions daily, weekly, monthly or as may be convenient to them. Every contribution shall be split into two, comprising 40% for contingent withdrawal and 60% 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.
- Pursuant to its regulatory and supervisory mandate, the Commission had established a separate Department dedicated to the supervision of all matters relating to Micro Pension Plan, including enforcement of compliance with the Guidelines and customer complaint handling and resolution. Our objective is to ensure efficiency and effectiveness in service delivery as well as transparency and accountability in the administration of the product by licensed pension operators.
- With the formal launch today and subsequent successful implementation, the Micro Pension Plan is expected to significantly expand pension coverage to greater number of Nigerians and further generate additional long term funds for Nigeria’s economic development. The Commission would collaborate with relevant stakeholders to sensitize and enlighten the target participants and members of the public on the features and benefits of the Micro Pension Plan.
- Once more, I welcome one and all to this momentous event for the formal launch of the Micro Pension Plan. I would like to specially thank Mr. President for graciously taking out time to perform this function. Indeed, the Commission remains eternally grateful to you for your consistent support to the pension industry and the practical steps taken since coming into office to address the plights of pensioners in Nigeria.