Micro Pension: PenCom, Operators Mull Adequate Incentives For Participants

PenCom DG, Mrs. Aisha Dahir-Umar.

The National Pension Commission (PenCom), said, it is collaborating with the Pension Operators in the country to introduce adequate incentives that would attract the over 48 million workers in the informal sector to be captured into the Micro Pension Plan (MPP) of the Federal Government.

PenCom’s Director General, Mrs. Aisha Dahir-Umar, disclosed this at the maiden edition of the Pension Conference on Thursday in Abuja.

Organised by the Pension Correspondents Association of Nigeria (PENCAN), the event brought together regulators, operators, and other industry stakeholders to brainstorm on the future of Micro Pension in Nigeria.

Speaking, Mrs. Aisha Dahir-Umar said, the Micro Pension Scheme should be seen as a platform to save for the rainy days, therefore, called for more awareness creation to capture the excluded 48.7 million informal workers into the safety net.

Represented by Mr. Ibrahim Buwai, an Assistant General Manager in the commission, the PenCom DG urged the operators to work on documentation early enough to avoid the issue of late payment of pension benefits.

She noted some of the milestones so far achieved under the Contributory Pension Scheme (CPS), adding that prior to the introduction of the CPS, the Defined Benefit Scheme was fraught with a lot of challenges.

She said, “As at the time the scheme was being introduced in 2004, estimated pension liability was in excess of N2trillion, today, pension assets are in excess of 15trillion”, which according to her was proof that the scheme has achieved the purpose for which it was established.

The PenCom boss said a platform such as this one provided by PENCAN was strategic to sensitize the workers in the informal sector to the importance of the scheme.

In his presentation, the Chief Executive Officer of PenOP, Oguche Aguda disclosed that 49.8 million Nigerians are in the informal sector, and 48.7 million out of the figure, representing 98 percent are excluded from formal pension.

Oguche who was represented by Mayomikun Obadofin, project management lead at PenOP said, apart from the flexibility of the scheme, incentives such as compounded interest, 40 percent contingency withdrawal, and health insurance would be introduced to encourage participants.

He admonished operators to embark on sensitisation to build confidence and trust in the minds of Nigerians towards the effective implementation of the micro pension scheme.

Corroborating the PenOP boss, the unit head, of micro pensions (North) at Access Pensions Zuwaira Haliru said, efforts are being intensified by pension fund administrators to sensitise workers in the informal sector to be capture in the micro pension plan.

“The PFA is taking the campaign to markets and other informal settings to communicate the benefits and why people should participate,” she said.

Also speaking, the managing director/CEO of Premium Pension, Umar Sanda Mairami said, the PFA has paid over N300 billion to Retirement Savings Account holders from inception till date.

He said, in old age, what is required is constant inflow of money, therefore, urged workers in the informal sector to go for micro pensions.

In her remarks, the Executive Secretary of Pension Transitional Arrangement Directorate (PTAD), Dr. Chioma Ejikeme said, the directorate has recorded some notable achievements since establishment.

Dr. Ejikeme said, PTAD launched “I Am Alive” Confirmation (IAAC) Solution, an online application designed to enable pensioners on the Directorate’s payroll easily confirm their aliveness from the comfort of their homes or neighbourhood, using either a smartphone or a computer system.

Ejikeme who was represented by the Head, Corporate Communications, PTAD, Mr. Gbenga Ajayi, said, “The “I Am Alive” Confirmation (IAAC) Solution is, safe, convenient, simple, and easy to use. It also eliminates the risks and stress associated with pensioners and PTAD staff travelling all over the country for periodic field verifications”.

Ejikeme acknowledged that the success story in PTAD would not have been possible without the support and collaboration of the media, especially the Pension Correspondents Association of Nigeria (PENCAN), “which is why we are here to reciprocate the support you have given to the Directorate over the years”. You have been immense in helping PTAD disseminate information to our pensioners and stakeholders, keep the news about the Directorate on the front burner and highlight our achievements”, she said.

On his part, the National President of the Nigeria Union of Pensioners, Chief Godwin Abumisi called on the PFAS and the supervisory body (PENCOM) to intensify their monitoring and supervisory efforts towards ensuring compliance with the investment regulations of pension funds assets towards securing the future of the micro pension contributors.

The National President of the largest single organized body of retirees/pensioners in Nigeria said, the purpose of pension plan generally, be it DBS, CPS, Mandatory or Solely Funded (Micro Pension) is towards securing the future of the contributor who will have something to fall back to after retirement from either a former or informal employment.

However, while commending the Federal and State Governments for this sustained initiative in putting pension plans in place for its workforce (formal employment) as well as those in the informal sector, the President expressed reservations about the challenges inherent in both the formal and informal (Micro Pension) operations such as the inability of the contributors to access their pension after retirement, occasioned by stringent conditions attached to it.

He gave some of the challenges to include;

1. Subjection of contributors after retirement to all manner of inhuman treatment as a result of the rigorous processes involved in accessing their funds, be it programmed withdrawal or life annuity.

2. Unnecessary delay in the payment of death benefits to deceased families due to bureaucratic bottlenecks. Examples abound. As I speak to you, the death benefits of one of my staff who died about a year ago under the mandatory CPS are yet to be paid to his family due to one excuse or the other. This kind of devastating experience is very discouraging to intending contributors who would like to key into the micro pension programme for fear that they might be subjected to the same excruciating experience.

3. Keeping vital information away from the contributors on the return on their invested funds – We all know that pension contributions (funds) are being invested, with their attendant interest accruals. The returns on such investments were never declared or brought to the notice of the contributors. I do sincerely hope the same fate does not befall the micro pension contributors.

However, despite the hiccups inherent in either the mandatory or micro pension system, the NUP supports its introduction and operation, realizing that no system is 100% perfect.

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