In bid to capture the underserved segment of the working population, Pension Reform Act (PRA) 2014 expanded coverage of the Contributory Pension Scheme (CPS) to the self-employed and persons working in organizations with less than 3 employees.
Data shows that this category of workers constitute the larger percentage of the working population in the country. Therefore, to achieve the pension market’s strategic objective of covering 30% of the working population in Nigeria under the CPS by the end of 2024, it is imperative to extend coverage to this important segment of the Nigerian economy.
In addition, the segment’s “widely dispersed nature and generally low and irregular incomes, there is need to provide a pension plan that would meet their special characteristics”, the strategy document noted. Therefore, the Micro Pension Plan initiative has been conceived within the context of an industry-wide strategy to bring this class of workers on board.
In implementing this initiative, the informal sector has been segmented into three broad categories. The low income earners, the high income earners and the SMEs. Each of these categories is going to be targeted with appropriate pension products and sensitization programmes that meet their peculiarities.
To drive this, a “robust technological platform that would support the provision of customer services is necessary to effectively and efficiently register, collect contributions, provide Retirement Savings Account support, pay benefits and provide financial advisory services to this class of workers.” Coincidently, special mobile phone applications had been successfully implemented in some jurisdictions for financial transactions including provision of pension services to the self-employed and informal sector workers. The success stories of these applications drives the confidence that similar platform can be designed and implemented in Nigeria. Consequently, the Commission had already commenced the sensitization of service providers and relevant regulators as well as the targeted workers in the informal sector with a view of creating the enabling environment and buy-in.
In addition, a Department has been established in the Commission to drive the implementation of the Micro Pension Plan.
