The Assurance for Self-employed Nigerians under the Micro Pension Scheme
- Prior to the introduction of the Contributory Pension Scheme (CPS) in Nigeria, there was no existing pension coverage for self-employed persons.
Micro Pension in Nigeria covers three strata – Lowest, Middle and High income earners.
The National Bureau of Statistics (NBS) estimated that the informal sector of the economy accommodates 70% of the nation’s working population.
The target of the Micro Pension Scheme is the self-employed in various trades and professions in Nigeria – artisans, accountants, lawyers, mechanics, tailors, market men/women, hair dressers, architects, engineers, etc.
At the introduction of the Contributory Pension Scheme (CPS), the emphasis had been on government employees and the organized private sector, leaving out the informal sector (self-employed Nigerians and artisans).
The success of the Contributory Pension Scheme (CPS), even though limited to government and organized private sector employees, has been remarkable so far.
Pension assets transited from billions of deficits to ₦ 6.1 trillion as at December 2016 belonging to 7.3 million contributors.
Currently, the Contributory Pension Scheme covers just about 10.58% of the total working population in Nigeria.
The National Pension Commission (PenCom) is rolling out Micro Pension Plan (MPP) to guarantee financial security for informal sector players as well as boost Nigeria’s pension assets to over ₦20 trillion by 2020.
Considering the potential to grow pension assets in Nigeria, PenCom wants to cover 30 per cent of the working population under the Contributory Pension Scheme (CPS) by 2024. The Micro Pension Scheme is an important tool in achieving this.
The scheme is available through the Retirement Savings Account (RSAs) method. With the advancement of technology, special mobile phone applications have been implemented in some aspect of the financial transactions to make contributions easier.
Upon full commencement of the scheme, Self-employed Nigerians will be guaranteed funds to fall back to when they are due for retirement.