Dr Farouk Aminu, Head, Research & Strategy Management, PenCom


I am delighted to deliver this address at the 5th Anniversary Awards of Business Today. I would like to start by expressing our appreciation to Business Today for its continued support in educating and enlightening the public on the workings of the Commission and the Pension Industry.
​I am also happy to mention that the National Pension Commission has maintained a cordial relationship with Business Today and has always supported objective reporting of pension issues. To this end, we would like to assure you that PenCom will continue to collaborate with Business Today and our doors will always remain open for clarification on issues that have to do with the operation of the Commission and the general administration of pension in Nigeria.
Distinguished Ladies and Gentlemen, may I at this juncture apprise you of the Micro Pension Plan in Nigeria, its benefits, challenges and the way forward.

The National Pension Commission (PenCom), in accordance with the Provisions of Section 2(3) of the Pension Reform Act (PRA) 2014, introduces the Micro Pension Plan. The Micro Pension Plan is set to include the self-employed and persons working in organizations with less than three employees. The Micro Pension Plan aims at ensuring that the informal sector participants save towards their old age. It is also expected that the plan would expand the coverage of pension contributors by an estimated 30 million people by the year 2024. This category of workers constitutes a large percentage of the working population in the country.
To implement this initiative, the Commission segmented informal sector into three broad categories namely; the low-income earners, the high-income earners and the small & medium scale enterprises (SMEs). Each of these categories will be targeted with appropriate pension products and sensitization programmes that meet their various peculiarities.

The Micro Pension Plan
The Micro Pension Plan refers to an arrangement for the provision of pension to the self-employed and persons operating in the informal sector. The Micro Pension Plan is also aimed at low-income earners who are often financially illiterate and usually have limited or no access to financial services. It is also the sought-after solution to old age poverty as can be found in jurisdictions like India, Kenya and Ghana who have successfully implemented a Micro Pension Plan.

Features of Micro Pension
Due to the peculiarities of the informal sector, the Micro Pension Plan would be;
i. Flexible
ii. Safe
iii. Convenient
iiii. Simple

Benefits of Micro Pension

i. Over time, old age poverty will decrease with the introduction of the Micro Pension Plan because the informal sector worker would have saved for retirement while active.
ii. The additional savings from Micro Pension Plan would aid economic development and macro-economic stability through investment in infrastructure and financial markets.
iii. Enhance pension coverage and improve Gross Domestic Product.
iiii. Contributions will pass to the next of kin in case of contributor’s death.

Challenges of Micro Pension:
Despite the benefits of the plan, there are a few envisaged challenges that may hinder the smooth implementation of the Micro Pension Plan in Nigeria. The challenges are as follows:

i. Financial Illiteracy: Some of the low-income earners, who constitute the third segment of the informal sector are mostly illiterate and thus, inexperienced with formal financial transactions and institutions.
ii. Low incomes: Unlike the high-income earners that can deposit in lump sum, most low-income earners are daily wage workers and as such are unable to deposit large amounts.

The Way Forward

The Commission expects that the implementation of the Micro Pension Plan will yield positive results for Nigerians and the Nigerian Pension Industry. There is however need to create more awareness about the plan.

The Commission has recently exposed the draft Guidelines and Framework on Micro Pension Plan to its Stakeholders and the general public for comments and observations and is on the verge of finalizing the Guidelines and Framework. In addition to the exposed draft guidelines and framework, the Commission is working on the IT infrastructure that will support the launch of the Micro Pension Plan. The implementation of the Micro Pension Plan, is expected to improve the standard of living of the informal sector participants at retirement and reduce dependence on extended family for support at retirement.

On behalf of the Commission and the entire Pension Industry, I would like to express our profound appreciation to Business Today for its consistent support, which has assisted us immensely in recording modest achievements, as well as educating and enlightening the public on the workings of the Commission.

Thank you and God bless us all.


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