Galvanising the informal sector for micro pension scheme

On 28 March, the much talked about micro pension plan (MPP) eventually commenced operations following the formal launch of the product by President Muhammadu Buhari in Abuja. The launch of the contributory pension scheme (CPS) some 16 years ago was a turning point in the administration and management of pensions in the country. Before CPS, pension administration was cumbersome and riddled with irregularities and fraud, with thousands of pensioners denied their entitlements.

To correct the inherent lapses witnessed in the old pension management thecps was birthed with the following objectives: establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the Public Service of the Federation, the Public Service of the Federal Capital Territory, the Public Service of the State Governments, the Public Service of the Local Government Councils and the Private Sector;make provision for the smooth operations of the Contributory Pension Scheme;ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory, States and Local Governments or the Private Sector receives his retirement benefits as and when due; andassist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

The contributory scheme has largely been successful. Unfortunately, the informal sector, which is the larger part of thesociety was not covered under the scheme.

Thus, the federal government introduced the MPP initiative as part of its financial inclusion drive, which is envisaged to build a diversified and inclusive economy. The MPP, promoted by the National Pension Commission (Pencom), is expected to significantly expand pension coverage to the informal sector, to cover self-employed persons, artisans, transporters, farmers, their employees, and other category of people not covered by the CPS.

At the launch, president Buhari said: “Today, millions of traders, farmers and other entrepreneurs in various industries are completely excluded from the different pension programmes in existence…the Micro Pension Plan guarantees that when these hardworking citizens retire, they can do it in dignity and comfort.”

Aisha Dahir-umar, the acting directorgeneral of Pencom said the micro pension plan targets the significant majority of Nigeria’s working population who operate in the informal sector. According to Dahir-umar, “Participants are expected from various informal sector workers, including market women, members of the National Union of Road Transport Workers (NURTW), members of Textile, Garment and Tailoring Associations, Kekenapep and Okada Riders Associations, Butchers Associations, workers in the Movie and Performing Art industry, mechanics and other workers in the automotive industry and single professionals like lawyers, accountants and many others. Micro Pension Plan is designed to fit the peculiarities of these informal sector groups.

Pension Fund Administrators (PFAS), under whom the CPS has thrived and even surpassed expectations, are equally tasked with managing the MPP. Long before the formal launch, many PFAS were expected to have calibrated their internal processes and operations to accommodate the new group of retirement savings account holders.

For instance, Stanbic IBTC Pension Managers Limited,nigeria’s biggest pension fund administrator, has continued to show leadership. According to the PFA, it considered the pension reforms necessary to maintain the strength and depth of the country’s Contributory Pension Scheme. Part of its engagement with the media was not only to intimate and educate them on the MPP but to also demonstrate its readiness for the micro pension plan. Some of the engagement platforms Stanbic IBTC Pension Managers had instituted to continue to engage stakeholders include Town hall meetings and public awareness programs. It has a dedicated 24/7 customer care line that can engage its clients in English and the four major Nigerian languages – Pidgin, Hausa, Igbo and Yoruba. And with offices in over 200 locations across the country and its electronic platform to engage the technology minded clients via internet or the Stanbic IBTC mobile app, it is clear Stanbic IBTC Pension Managers is truly ready to onboard the MPP customers.

Following the launch of the micro pension plan, Stanbic IBTC again pledged its readiness and commitment to contributing its quota when it launched a game-changing nationwide micro pension campaign tagged ‘Game Plan - Retire Well’, which is part education and part assurance that it has the necessary experience, expertise and platform to successfully manage the new scheme. According to the PFA, the effort is aimed at sensitising and stimulating the informal sector not covered by the current CPS to secure their buy in into the pension scheme.

Eric Fajemisin,chief executive, Stanbic IBTC Pension Managers Limited said of the Retire Well campaign, “It is our callout to stakeholders to secure their future and reinforce the need to save and plan for retirement, irrespective of the nature of their jobs or the profession they may find themselves in. It is all about taking a decision today by signing up for a retirement plan, making the right move now towards a secure future or simply put, having a game plan.”

Fajemisin noted that while Retire Well is targeted at the various tiers of the demography in both the formal and the informal sectors, it amply addresses the full spectrum of the upper class/skilled workers, the middle class/semiskilled, and the lower class/unskilled workers.

Speaking further on the scheme, Fajemisin said MPP is meant to insulate those not covered in the formal sector of the economy as well as low-income earners against old-age poverty. The MPP will equally help in deepening asset accumulation in the country. According to him, the scheme will provide the crucial capital required for investment in critical sectors of the economy. As an initiative designed to cover an estimated 70 percent of Nigeria’s working population in the informal sector, the scheme offers enormous benefits to the society, regardless of challenges associated with its seamless implementation.

Among its benefits is improved standard of living for the elderly, safety of funds and access to other incentives, such as reduction in their dependency on the younger generation, flexible contribution remittances, the opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion in the country.

Nike Bajomo, executive director, Business Development, Stanbic IBTC Pension Managers Limited said the company intends to create awareness across the country about Retire Well micro pension scheme to drive adoption even as the PFA continues to engage various stakeholders on developments in the industry to ensure that the provisions of the CPS are fully harnessed to the benefit of all. Such platforms as Town Hall meetings, Stakeholders fora, Associations’ meetings, Public Awareness programsand exhibitions on TV, Radio & Digital media, among other initiatives Stanbic IBTC Pension Managers will be organised yearly to ensure regular engagement and to drive awareness.

Bajomo assured that the PFA, backed by the experience and expertise of Stanbic IBTC Group, which recently marked its 30th anniversary, and as a member of the over 155-yearold Standard Bank Group, will not relent in providing excellent services to its RSA holders and Nigerians. Stanbic IBTC Pension Managers Limited, she said, has over 1.7 million RSA holders nationwide, with assets under management in excess of N2.8 trillion. It paid N3.26 billion over 55,809 retirees in March, 2019 and has paid out over N635 billion to retirees since the PFA commenced operations in 2006.