According to the Nigeria Labour Force Survey published by the National Bureau of Statistics (NBS), only 26.3% of Nigerian workers will have pension and health insurance in 2023. According to the survey, Zamfara state in the Northwest had the highest number of employees with health insurance and pension plans, at 65%, while Abia had the lowest, at 3.9%.
According to the survey, 26.3% of Nigerian employees are eligible for pension and health insurance plans. Zamfara state had the highest (65.9%) and Abia had the lowest (3.9%) among wage workers.
The low number of employees with pension and health insurance plans in Nigeria is due to the country’s large informal industry. According to the study, about 92% of Nigeria’s employed population are engaged in informal employment.
The informal sector is made up of firms with open entry and exit, complete market information, and market forces that operate outside of formal restrictions, similar to a competitive market. These businesses often lack formal organizational structures, generate low and unpredictable earnings, confront business uncertainty, and do not provide social benefits such as pensions to employers or employees. In addition, they frequently fail to keep proper records.
According to the IMF, Nigeria’s informal sector would account for 57.7% of the country’s GDP in 2022, demonstrating its importance to the economy. However, millions of Nigerians in this industry are still excluded from traditional pension schemes, making them exposed to poverty in retirement.
Health insurance, pension plan in Nigeria
Employee benefits like health insurance, pensions, annual leave, and work-life balance initiatives play a crucial role in enhancing job satisfaction, which can lead to higher productivity and employee loyalty.
The Pension Reform Act mandates that employers with at least 15 employees must participate in a contributory pension scheme. Under this scheme, employers are required to contribute a minimum of 10% of an employee’s monthly salary, while employees contribute up to 8%.
Similarly, the National Health Insurance Authority Act requires health insurance for all employees residing in Nigeria. Employers with more than five staff members must enroll in a health insurance scheme, ensuring contributions are made to the public health insurance scheme of the state where they operate. Alternatively, employers can opt to provide private health insurance for their employees under the same act.
However, enrolment in health insurance has been low when compared to the total population as around 18.7 million people are enrolled according to the National Health Insurance Agency (NHIA).
