Only 7.7% of workers contribute to pension funds — PenCom
About 92.3 per cent of workers in the country have no form of pension savings to cater for them when they retire from paid employment, the National Pension Commission has said.
The commission specifically said 7.24 million workers, representing 7.7 per cent of Nigerian workers, contributing to the Compulsory Pension Scheme as of September 2016.
According to the latest information obtained from the PenCom, this figure also represents about four per cent of the total population.
While giving the current pension coverage in Nigeria, PenCom said, 'The number of registered contributors under the formal Contributory Pension Scheme was 7.24 million as of September, 2016. This represents about 7.7 per cent of total labour force in Nigeria and represents above four per cent of the total population.'
The Head, Micro Pensions Department, PenCom, Polycarp Anyanwu, said the informal sector was largely uncovered by any structured pension and represented over 70 per cent of Nigeria's total working population.
According to him, some of the peculiarities of those within the informal sector are irregular flow of income; highly mobile and flexible jobs; lack of permanent work addresses; and lack of official means of identification and other documents.
He observed that the informal sector was typically excluded from the pension system prior to the enactment of the Pension Reform Act 2014.
Anyanwu explained that the PRA 2014 established legal framework for micro pensions.
'Section 2(3) of the PRA 2014 extended the coverage of the CPS to self-employed persons,' he said.
He explained that micro pension remained a global trend and had been implemented in countries such as India, Kenya and Ghana.
According to him, this will help to extend pension to the large working population that are self-employed.
He noted that micro pension initiative was meant for the provision of pension coverage to self-employed persons and covered three stratums, which were the low income earners, middle-income earners and high-income earners.
'Our target is the self-employed in various trades and professions in Nigeria - artisans, accountants, lawyers, mechanics, tailors, market men/women, hairdressers, architects, engineers, etc,' he said.
The pension expert said that micro pension scheme was an offshoot of the pension industry's five-year strategic plan to expand the coverage of the CPS to 20 million contributors by 2019.
When the scheme officially commences, according to him, the process will ensure easy method of contribution remittance.
He said, 'Contributions to be split into two; a smaller percentage shall be savings and accessible to the contributor, while the greater percentage shall be strictly set aside for pension. It will ensure the individuals have retirement savings accounts managed by the PFAs and funds kept in custody of the Pension Fund Custodians.'
Anyanwu also said that a special micro pension fund would be established for flexibility of withdrawals.