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Chuks Udo Okonta
The inability of Pension Fund Administrators (PFAs) to expand the Micro Pension Plan (MPP) six years after the launch, has engendered calls for the licensing of companies that should be fully focus on such operations.
The Micro Pension Plan was launched in 2019 to provide retirement savings for people
working in the informal sector.
According to the National Pension Commission (PenCom) the total Micro Pension Registration count from inception to Q3 2024 stood at 164,031.
Specifically, it said the number of informal sector workers with Funded RSAs was 12,241.
From 2020 to Q3 2024, the number of funded RSA registration increased by 5,971.
The total amount saved in the RSAs of Micro Pension Participants was ₦967,194,762.23 as
of Q3 2024, which represented a growth of ₦878,065,827.85 from the 2020 figure of
₦89,128,934.38.
One of the reasons considered to be responsible for the slow growth in the sector is non interest by some pension fund administrators.
A report obtained from PenCom revealed that three firms registered only six subscribers in the third quarter of 2022.
PenCom in its micro pension registration schedule for the month of September 2022, which showed the Retirement Savings Accounts (RSAs) registered in third quarter, revealed that Crusader Sterling Pensions Limited, registered four contributors; Guaranty Trust Company, one contributor and Radix Pension Managers Limited, one contributor.
Onboarding subscribers on the micro pension plan has remained a challenge amidst notable proposed initiatives by the pension industry.
The call for licensing of micro pension focused companies, stemmed from complaints from PFAs on charges amidst high overhead in servicing the market niche.
To effectively unlock the micro pension plan and provide comfortable retirement for the informal sector workers, PenCom should allow operators with similar characteristics to run the business.
Their capital should be tailored to the business they do and their charges should align with their overhead.
They should be allowed to operate very close to their clients and should understand the language of their clients.
In terms of regulations, they shouldn’t be subjected to tough regulations that will trigger high overhead, but should be effectively regulated to maintain standards as required of financial institutions.
