Micro Pension – A Further Tool of Financial Inclusion
The social security challenge is heightening. This is so from perennial issues of our situation of economic and political quagmire – an inheritance from various previous governments.
As people age, increasing fears and concerns of what the future offers come to the fore. For those in more structured environments, responsible employers think and put in place an internal plan to help aging and retiring staff to settle down to a secure retirement.
Key government parastatals like the NNPC, CBN, NDIC etc are enviable places to retire. Other government organisations similarly enjoy some guarantees but not robust structures for retirement. Major and structured financial, oil and gas and some manufacturing and private sector organisations have done fairly well, too, in pension provision.
However, the larger number of the unstructured Nigerian population remain not catered for. They are left to chance and limits of their knowledge and capacity to deal with the challenges and vagaries of getting old. Ironically, we are all affected, because they are our uncles and aunties; brothers and sisters; fathers and mothers who now lean on us for family pension plans (if any), or handouts of stipends that caters for only a few days, and back to square one. Aging becomes undignified. Health and maintenance remain a critical issue of aging. The current working population is thus under siege. There are endless requests for support here and there. Sadly, this has also promoted corruption – greed apart.
Micro pension has thus become an invaluable tool to bridge this terrible deficit in financial inclusion and its ripple effects for no plans for aging and retirement in the unstructured business circles – whether with official retirement age or not. Often, no retirement age in this sector but reduced business activities due to reducing energy and health issues.
Financial Inclusion is total. Total in the sense that this philosophy drags in the so-called underprivileged or low income segment into the opportunities and exposures that financial world offers. A lot of people are shut of a world of opportunities of the financial sector offers to enhance their present and future lives. Though beyond pension only, this platform now sucks them in through their cluster bodies to expose them to the knowledge and benefits of not only pension plans, but puts them into a community of people who can tap into other benefits accrue-able to cluster bodies. This thus makes up for short falls of individual small businesses access to comprehensive financial services available to all. This of course leads to empowerment and economic growth and development.
What does financial inclusion involve? It involves helping the low income, the unstructured businesses, individual professionals, retail outlets, the unexposed, the artisans, develop a virile savings culture, getting benefits of financial advise, affordable credits and enhancing minimum capacity to access same, payment and remittances platform and benefits of insurance and banking services.
Why are the above mentioned essential? For instance, we live in an indulgent world where most people satisfy just the present and think little of the future. So, good savings for critical long term value projects have often been relegated to the background for social values of short term values, such as almost every weekend “aso ebi”, as well as other social unnecessary “taxes”. Financial inclusion now assists people through structured approaches to develop valuable habits that will help their future in a near effortless and systematic approach. They thus can have bank-able projects and support like mortgages, personal cash accumulation for business growth – as no business grows without good capital venture.
Further benefits include the good feelings of not being left out in mainstream events, but a platform to be involved; a platform to be listened to and get structured regular information; a platform for the options of informed choices, a platform for positive relationships, and overall enhancements.
“Financial Inclusion is a right, not a privilege for a select few” – Judge Geary, in Oberti v. Board of Education.
“We want a culture that is inclusive of everyone, and every one who joins feels they have opportunities to succeed and grow” – Nellie Borreso.
What do you think PenCom’s role in facilitating this financial inclusion?
PenCom has done well so far. It is a new learning needing to be domiciled. They have had to wade through un-structured parts to create in-routes for Industry path and public assimilation and integration. Change pioneering and buy-ins are amongst most difficult things to achieve. This is through the Micro pension plans. It is for individual professionals, artisans, retail or individual entrepreneurs, farmers etc. it captures the unstructured working environment. It is not necessarily micro by way of income. Micro as a name might just be for want of a better name.
This sector creates financial inclusion for these groups for pension needs sensitization and action plans opportunities. This exposes them to other benefits overtime – short term and long term.
This requires extensive and insightful planning against failure. Remember, the larger and probably less informed population is involved. Trust and confidence are involved. Transparency and modernity must be incorporated. As you already know, all modern businesses are strong on ICT platforms. There are intensive activities going on in PenCom and high level interactions with Pension Funds Operators Association of Nigeria (PenOp) and other stakeholders. It should be a massive social and economic relative success.
Sensitization is going to create increasing trust and awareness. This is critical, because the common man has distrust not only for government promises due to previous failures, but also from many fraudulent activities in the various financial sectors, as well as security of their hard earned moneys. This is part of the reasons for this press briefing.
What is IEI-Anchor Pensions doing in this regards?
Like most, if not all of the PFAs, internal structures are largely in place already. These include closely monitoring the Regulator’s ‘dance’ steps and domiciling same in our company. Staffing and a robust ICT network is being enhanced. Remember that, those in the micro pension sector constitute no less than 60 per cent of the population. There is also a growing tilt towards increasing entrepreneurial drive, as the direct jobs are decreasing. It is thus a larger untapped market.
It is important to develop people friendly products to both attract them and accommodate their sensitivities. We are working at that. Reaching out to them and educating them is of paramount importance. The mode of achieving this is very important as well. It has to be both creative and sensitive. We are noting all of these.
Paper as presented by:
IEI-ANCHOR PENSION FUNDS MANAGERS