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Micro Pension Scheme Suffers Regulatory Setback



The initial plan to kick-off  the micro pension scheme have met a stumbling block, as the National Pension Commission(PenCom) could not keep up to its promise of commencing the scheme by the end of 2017, LEADERSHIP can now reveal. To this end, about 70 million Nigerians in the informal sector remain locked out of the pension scheme as the new scheme did not give room for the informal sector players to join it.

It was in a bid to capture self-employed people, especially those with irregular income, usually in the informal sector who are largely financially uninformed with limited or no access to financial services especially pension plan that the idea of micro pension came about. While the previous administration in PenCom seems to have done a major work to ensure the micro pension scheme commence as earlier planned, the unfortunate exit of the previous director-general, Mrs. Chinelo Anohu-Amazu, who championed the initiative seems to have slowed down development in this area.

However, with assumption of office of the current acting director of the commission, Mrs. Aisha Dahiru-Umar, development in micro pension has been lethargic, with little or no action to continue from where the previous administration left it, thereby, casting a cloudy future on the initiative. Industry sources revealed that the redeployment of former Head of Micro Pension Department, Polycarp Anyanwu, who has done a great job towards nurturing this concept, to another department, may have rubbed off the Commission of the needed experience in the micro pension department and that it will take time for the new head of the department to fully integrate this concept before understanding where to start from.

Further investigation revealed that staff who are not knowledgeable on vital operations of the Commission were assigned sensitive responsibilities leading to slowing down of activities in the Commission, of the micro pension scheme is part of. Moreover, information has it that players in the Nollywood industry and law profession, among others, expected to be under this scheme as well, objected to the name ‘Micro Pension’, calling for a change of name before they can subscribe to the scheme. To this end, the scheme has hit a stumbling block and may require a total rebranding to cajole more people to subscribe to this scheme.

A top official at the Commission who spoke under the condition of anonymity affirmed that there is no activity in place at the moment to kick-start the scheme. Another official further said that the lack of a substantive DG and Board is affecting the functions of the Commission. PenCom, had, in October 2016 maintained that it would release the micro pension guidelines in mid-2017 and commence the scheme by end of the year. This, vision was halted by the new leadership in the commission.

According to the commission, the micro pension scheme is expected to help boost the pension contributors to 20 million Nigerians by 2019 and 30 million by the year 2024. It is also expected to generate about N3 trillion to the pension assets, while mobilising about 12 million contributors within five years. Highlighting the challenges of the scheme, chief executive, Stanbic IBTC Pension Managers Limited, Mr. Eric Fajemisi, said, though micro pension scheme is good for the country, it has challenges. These challenges, according to him, include insufficient awareness and negative perception towards it, modest financial literacy in the country, high cost of promoting awareness on the Contributory Pension Scheme (CPS), lack of reliable data on the informal sector and low buy-in by unions in the pension sector, among others. These challenges, he noted, must be addressed prior to commencement of the scheme and thereafter.

Fajemisi said on the other hand, the micro pension scheme, when finalised would ensure improved standard of living for the elderly, guarantee the safety of funds and may provide access to other incentives, such as mortgage facilities and health insurance. According to him, other benefits would include flexible contribution remittances, the opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion and attainment of economic stability objectives.

He described the proposed micro pension scheme as having the capacity to deepen asset accumulation in Nigeria, which will also provide the vital capital required for investment in critical sectors of the economy. Earlier, the head, micro pensions department of PenCom, Mr. Polycarp Anyanwu, said, micro pensions, directly addresses breakdown of family support, averts old age poverty as it engages and extends pension to the large working population that are self-employed. He said PenCom’s target is the self-employed in various trades and professions in Nigeria – artisans, accountants, lawyers, mechanics, tailors, market men/women, hair dressers, architects, and engineers, among others.

Section 2(3) of the Pension Reform Act, 2014 legal framework extended coverage of the Contributory Pension Scheme to self-employed persons through micro pension scheme.  The scheme, if it finally takes off, will generate about N3 trillion to the pension assets, while mobilising about 12 million contributors within five years.