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About 47.92 million Nigerians working in the informal sector seemed to be walking into old age poverty due to lack of structured pension plan, Inspenonline can report.
According to available data, there are about 60 million working individuals in Nigeria of which 80 per cent are in the informal sector, amounting to 48 million workers.
Determined to provide structured pension plan for the 48 million informal sector workers, the federal government through its agency, the National Pension Commission (PenCom) developed the Micro Pension Plan (MPP), which guidelines and framework was issued in 2018 and launched by President Muhammadu Buhari, GCFR and Commander-in-Chief of the Armed Forces in March, 2019.
PenCom noted that since commencement of the micro pension plan three years ago, 81,674 subscribers have been registered as at July 31, 2022.
The pension sector regulator said total contributions by MPP subscribers stood at N296,957,107.11, total contingent withdrawals stood at N22,363,726.87 and conversion from informal to former sector was N4,934,634.93.
The Head, Micro Pension Department, PenCom, Dauda Ahmed, in a paper entitled: ‘The Micro Pension Plan; Bringing Financial Security at Old Age to the Doorsteps of the Informal Sector’, noted that the Pension in a bid to get the workers embrace the plan, has had stakeholders’ engagement and launched industry driven media campaign.
He identified challenges such as insufficient awareness of the Micro Pension Plan by Informal Sector workers; lack of adequate incentives to encourage participation; different competing products in the market with more flexibility towards access to funds, such as thrift savings/daily collections; negative perception/trust deficit stemming from the experience of Nigerians on pension administration under the defunct defined benefit scheme; non-adoption of shared services arrangements, which results in high infrastructure setup cost for PFAs to drive MPP nationally and COVID-19 and the slowdown in economic activities, to be hindering the growth of the plan.
On way forward, he canvassed product design; media campaign; engagement with key stakeholders to secure buy-in of MPP and adoption of shared services technology platforms to improve service delivery and reduce costs.
Ahmed submitted that the informal sector constitutes a large and persistent scale in any economy, especially in Africa, stressing that in Nigeria, over 80 per cent of the working population falls under the informal sector.
He maintained that informal sector workers are heterogeneous in nature because the sector employs a wide range of individuals, ranging from wage earners and self-employed to domestic workers, adding that they are often characterized with irregular income and lack long-term saving culture.