Micro pension will generate profit for artisans, petty traders- PenCom
Pension Fund Administrators (PFAs) will invest all pension contributions under the Micro Pension Plan (MPP) and all income from such investment activities will be credited into the Retirement Savings Accounts (RSA) of the contributors.
The National Pension Commission (PenCom) has said that it is already set for the launch of the plan before the end of the first quarter of this year.
Information sourced from PenCom showed that subject to regulations issued by the Commission, all interests, dividends, profits, investments and other income accrued to micro pension fund and assets are not taxable.
Investment decisions are made by the PFAs in line with investment regulations issued by the Commission.
Micro Pension Plan refers to an arrangement under the Contributory Pension Scheme (CPS) that allows the selfemployed and persons working in organisations with less than three employees to make financial contributions towards the provision of pension at their retirement or incapacitation.
Nigeria’s apex pension regulatory agency, PenCom, has said that the plan guarantees secured future through steady income at retirement and reduces old age poverty and the process is easy, simple and flexible.
Daily Trust observes that countries like Ghana, Kenya and India have adopted micro pension plan for workers in the informal sector of their economies.
The mandatory pension and micro pension plan are arrangements under the CPS but the only difference between the two is the nature of participation as the mandatory pension is obligatory for all eligible employees and both the employer and employee contribute towards the payment of the employee’s pension at retirement while micro pension on the other hand is voluntary and solely funded by the contributor.
The guideline for the implementation of the plan provides that for anyone to participate in the plan, the person must be a Nigerian, not below 18 years of age; have a legitimate source of income; belongs to trade association or profession; and may be self-employed or an employee of an organization with less than three employees with or without a formal employment contract.
Micro Pension is different from savings account maintained with a Commercial Bank because any savings made under the plan can only be withdrawn as monthly pension after retirement. On the other hand, savings made with Commercial Banks can be withdrawn anytime as the need arises.
There no stipulated minimum amount of contribution under the Plan because, as PenCom puts it, “it is dependent on the Contributor’s pension aspiration and financial capacity. Thus, higher contributions will result in more money available for pension.”
PenCom said contributing to the scheme is flexible as contributions can be made daily, weekly, monthly or as may be convenient to the contributor and shall be subject to reporting requirements under the Money Laundering (Prohibition) Act.
“Contribution under the Micro Pension Plan can be made by cash deposit or electronic transfer through any payment platform, or other financial service agents approved by the Central Bank of Nigeria (CBN),” PenCom said. is