Pension Fund Administrators (PFAs) and the National Pension Commission (PenCom) have highlighted the challenges they have faced in their efforts to smoothly push the federal government’s Micro Pension plan initiative to the targeted market.
However, they said in the mist of the challenges, increased public awareness and review of the guidelines among others is the way to go.
Speaking at the recent Micro Pension Open Day organised by the umbrella body of pension fund administrators, the Pension Fund Operators Association of Nigeria (PenOp) in Lagos, they said the challenges were of two folds from the informal sector workers and PFAs.
From the informal sector workers they highlighted the challenges as lack of awareness, mistrust about the pension system, absence of appropriate incentives such as collateral for Micro finance and lack of financial literacy.
From the PFAs, they pointed out the challenges as short term perspectives base of the Micro pension plan and perceived associated costs, inadequate awareness campaigns, slow adoption of shared services arrangements by pension fund operators, poor service delivery, weak economic indices occasioned by inflation as well as increased poverty levels.
The Head, Micro Pensions Department National Pension Commission, Dauda Ahmed, who highlighted the challenges, said they have impacted negatively on the implementation efforts of both the pension fund administrators and PenCom.
He listed efforts made so far to push the Micro pension scheme to the targeted market as collaborations and stakeholders’ engagements through engineering leaderships of associations, unions cooperatives, civil society organisation and the media.
He also said the commission made further effort in renewing awareness campaign drive by in print, electronic and social media platforms among other efforts.
He said with these efforts, a total of 97,591 contributors have so far registered into the Micro pension scheme as at May 31, 2023 while a total of N435,607,515,14 has been contributed.
He said out of this, contingent withdrawals stood at N30,243,070.69 by 150 Micro pension contributors while a total of 587 contributors have converted from Micro pension to formal Contributory Pension Scheme.
On the way forward to achieve the set objectives of the Micro pension scheme Ahmed said there was need for increased enlightenment and public awareness campaign by the regulator and PFAs, review of the MPP Guidelines, further drive of the development of incentives, development of industry shared services platform, enhanced service delivery among others.
Presenting a paper titled, “Current Financial Inclusion Landscape,” Research Associate at EFlnA, Chioma Nwaiwu said Nigeria had plan to have 95 per cent of its population financially included in 2024.
She noted that there had been improvement in number of people using formal financial services adding that it had increased from 48.4 million to 50.5 percent of adults or 53.6 million adults.
She also noted that nearly one in two Nigerian adults do not use any formal or regulated financial services while more than one in three Nigerian adults remained completely financially excluded.
She said 65 percent of Nigerian adults are financially included.
“While overall financial inclusion continues to grow incrementally, progress has been too slow to meet national financial inclusion strategy targets” she noted.
She also observed that there was need for increased uptake and usage of pensions to achieve the Sustainable Development Goals’ targets, which were poverty reduction, good health and well-being, decent work and economic growth and reduced inequalities.
According to her, pension reduces the risk of poverty among retirees, out of job persons as well as informally employed persons and provides financial resources for healthcare during retirement
She also said pension incentivise savings and support economic stability, observing that Pension reduces inequality by extending social protection benefits to marginalised and underserved population.
She noted that there was a critical mass to scale up Micro pension in the informal sector of Nigerian economy pointing out that 49.8 million Nigerians were in the informal sector.
She noted that most informal sector workers plan to rely on their savings, children or businesses in retirement.
