The National Pension Commission plans to commence the micro-pension scheme for the informal sector.
According to a statement, the initiative is expected to attract over 20 million workers and N3tn funds under the Contributory Pension Scheme.
To ensure seamless operations, PenCom and the pension fund operators have developed information technology to support the plan.
The commission has also engaged the informal sector groups, such as the Nigerian Union of Textile, Garment and Tailoring Workers of Nigerian, a body consisting self-employed tailors and garment workers; partner trade associations, non-government organisations and religious bodies in a bid to persuade them to subscribe to the micro-pension plan.
According to the Acting Director-General, PenCom, Mrs Aisha Dahir-Umar, the implementation of the micro-pension plan will improve the standard of living of the informal sector’s participants at retirement and reduce dependence on extended family for support at retirement.
The plan, when operational, she said, would capture self-employed people, especially, those with irregular income, usually in the informal sector and “are largely financially uninformed with limited or no access to financial services, especially, pension plan.”
Section 2(3) of the Pension Reform Act, 2014 legal framework extends the coverage of the CPS to self-employed persons through the micro-pension scheme.
The Head, Research & Corporate Strategy, PenCom, Dr Farouk Aminu, had, at a forum in Lagos, said the commission was working on ensuring that the plan commenced as planned.
According to him, this is a development that can enhance the growth of pension assets in the country.
He stated that the micro-pension scheme planned to mobilise about 12 million contributors within five years.
On the benefits to be derived, Aminu noted that self-employed people and workers in the informal sector could reap by participating in the plan.
He explained that the initiative, in addition to providing income for people at old age and inculcating a savings culture through highly protected and regulated investment, would afford them the opportunity to connect to other programmes of the government while helping to finance infrastructure across the country.
Subscribers could, as well, use the balance in their Retirement Savings Accounts as equity contribution for residential mortgages and support their businesses, he added.
According to him, additional benefits to self-employed persons and informal sector workers include the cover provided under the Pension Protection Fund.
He explained that under the arrangement, the government would bridge shortfalls or financial losses from the investment of their accumulated retirement savings and guarantee them minimum pension in retirement, irrespective of how much they were able to save before retiring.
He posited that the plan would be funded by an annual subvention of one per cent of the monthly wage of Federal Government employees, the annual levy on PenCom and pension operators as well as pension fund investment income.
In the statement, the Head, Corporate Communications, PenCom, Mr Peter Aghahowa, said, the micro-pension initiative was made flexible for people to easily join, while the method of contribution would be decided by the contributors, who were to choose whether to contribute daily, weekly, monthly, quarterly or according to their plans.