PenCom to launch micro pension
All is set for the launch of Micro Pension Scheme by the National Pension Commission (PenCom) this month. The planned micro pension is expected to attract over 20 million workers and N3 trillion into the pension assets. With total pension assets as at October, 2018 at N8.45 trillion, the country’s pension assets are expected to rise to over N11 trillion with the micro pension plan. Investigation revealed that the pension industry regulator, PenCom has put all mercenaries in place to ensure smooth launch of the plan. To ensure seamless operations, PenCom, together with pension fund operators have built robust Information Technology (IT) infrastructure that will support the plan. In preparation for the take-off of the scheme, the commission said it has also had engagements with informal sector groups, such as, the Nigerian Union of Textile, Garment and Tailoring Workers of Nigerian (NUTGTWN), a body consisting Self- Employed Tailors and Garment Workers; partner trade associations, Non-Governmental Organisation (NGOs) and religious bodies. PenCom Acting Director-General, Mrs Aisha Dahir-Umar, at a pension forum in Lagos, said the implementation of micro pension will improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement. The scheme, when operational, she said would capture self-employed people, especially those with irregular income, usually in the informal sector are largely financially uninformed with limited or no access to financial services especially pension plan. Section 2(3) of the Pension Reform Act, 2014 legal framework extends the coverage of the Contributory Pension Scheme (CPS) to self-employed persons through micro pension scheme.
The Head, Research & Corporate Strategy, PenCom, Dr. Farouk Aminu, added that the commission is working on ensuring that the plan commence as planned, noting that this is a development that could enhance the growth of pension assets in the country. He stressed that the plan has the potential to generate about N3 trillion to the pension assets, while it intends to mobilise about 12 million contributors within five years. On benefits to be derived, Dr. Aminu noted that self-employed people and workers in the informal sector could reap by participating in the plan, saying in addition to providing income for them at old age and inculcating a savings culture through highly protected and regulated investment. The plan would afford them the opportunity to connect to other programmes of government while helping to finance infrastructure across the country. He said: “The self-employed can as well use the balance in their Retirement Savings Accounts (RSAs) as equity contribution for residential mortgages and support their businesses and benefit from other micro-credit schemes and special awareness programme affiliated to the scheme, he said. “The additional benefits to self-employed persons and informal sector workers include the cover provided under the Pension Protection Fund (PPF). Under this arrangement, government would bridge shortfalls or financial losses from investment of their accumulated retirement savings and guarantee them minimum pension in retirement, irrespective of how much they are able to save before retiring. The plan will be funded by an annual subvention of one per cent of monthly wage of Federal Government employees, annual levy on PenCom and pension operators as well as pension fund investment income.” The Head of Corporate Communications, PenCom, Mr. Peter Aghahowa, also added that the scheme is made flexible for people to easily join, while the method of contribution is decided by the contributors, who are to choose whether to contribute daily, weekly, monthly, quarterly, and so on.
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