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FG launches Micro Pension Plan for informal sector

FG launches Micro Pension Plan for informal sector

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As part of the federal government’s initiative to achieve financial inclusion, a diversified and inclusive economy, President Muhammadu Buhari has formally launched the Micro Pension Plan (MPP).

The MPP, an initiative of the National Pension Commission (PenCom), which is expected to significantly expand pension coverage to informal sector players including self-employed persons and employees of organisations with less than three staff, was launched by the President on Thursday at the Aso Villa in Abuja.

Buhari, who explained that the plan is designed specifically to capture those in the informal sector, said that: “Today, millions of traders, farmers and other entrepreneurs in various industries are completely excluded from the different pension programmes in existence.

“If you recall, one of the three core pledge of this government is the creation of a diversified and inclusive economy. This can only be achieved by creating an enabling environment for farmers, entrepreneurs and people in other professions.

“In the past three years we provided grants, concessionary loans and technical support through the Small and Medium Enterprises (SME) clinics to farmers, traders and SMEs.

“The Micro Pension Plan guarantees that when these hardworking citizens retire, they can do it in dignity and comfort.”

Buhari encouraged trade associations, unions, non-governmental organizations and other stakeholders in the informal sector to join hands with the government and the pension industry to enlighten their members and the general populace of the benefits of the plan.

Buhari further added that: “We are working tirelessly to sanitize some of the rot within the pension system we inherited.

READ ALSO: FG working hard to sanitize pension system, says Buhari

“This government remains committed in resolving all pension issues and payments, despite the lean resources of the government. We will ensure that every hardworking Nigerians in the private sector, formal and informal can retire without fear.”

The Acting Director-General of the National Pension Commission (PenCom), Aisha Dahir-Umar, explained that the micro pension plan targets the significant majority of Nigeria’s working population who, incidentally, operate in the informal sector.

According to her: “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.”

She explained that the product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts. Also, access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms.

“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,” she said.

The Head of Corporate Communications of the commission, Mr. Peter Aghaowa, said that: “With this new initiative, and considering the fact that in Nigeria the demographics is such that we have more people in the informal sector than in the formal sector, our expectation is that by 2024, we would have been able to add 30 million people from the informal sector; it will definitely shoot up the pension funds.

“Presently, we are at about N8trillion, so we expect that it will have an exponential effect on the pension funds.”

Concerning eligibility, Mr. Aghaowa explained that “any interested individual has to have attained the legal age of 18 and have a source of income, or even a professional like a lawyer, accountant etc.”

Concerning pubic enlightenment, The President of Pension Funds Operator Association of Nigeria (PenOp), Mrs. Aderonke Adedeji, explained that it is a joint responsibility of operators and PenCom to enlighten the populace, which is the first and most important aspect of this plan.

“It is our job to bring people onboard. The registration process has to be as seamless and simple as possible.

“It will largely be technology based because in order to reach the masses and give easy access, there will be a lot of reliance on technology.

“As operators, we will begin to invest funds, administer the funds, and keep people’s record to ensure that they know what their balances are,” she said.

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