The National Pension Commission (PenCom) says it will provide incentives such as health insurance for contributors willing to embrace the Micro Pension Plan (MPP) in its efforts to incorporate workers in the informal sector.
This development is expected to deepen the health insurance sector of the economy as the Pension Commission has also simplified the documentation process for pensioners under the Contributory Pension Scheme.
This is in order to make the system attractive to the informal sector, which controls about 80 per cent of the Nigerian economy.
The Director-General of PenCom, Aisha Dahir-Umar, at a workshop in Abuja themed “Increasing informal sector participation in the Contributory Pension Scheme: The case for Micro Pension Plan,” said bringing the informal sector with its huge personnel into the pension net is part of the efforts to drive the Micro Pension Plan, and also one of the important areas of focus of the Commission.
President Muhammadu Buhari on April 27, 2019, officially launched the Micro Pension Plan to ensure that Nigerians who worked hard during their active years in service of their fatherland live in dignity and retire without any cause for alarm.
The Micro Pension Plan was initiated by the National Pension Commission targeting workers in the informal sector of the economy. Since the launch of the MPP in March 2019 by Buhari, over 72,846 contributors in the informal sector had been registered by Pension Fund Administrators.
The MPP was conceptualized to expand pension coverage to the informal sector, including small-scale businesses, entertainers, professionals, petty traders, artisans, and entrepreneurs.
Dahir-Umar who was represented at the workshop, by the Head of Corporate Communications Department, Abdulqadir Dahuru, said the MPP is being implemented to curb old-age poverty by assisting the workers to contribute while working and build long-term savings to fall back on when they become old.
The Pencom DG also revealed that the Commission is implementing a series of measures to improve the pension scheme noting a Revised Regulation on the Administration of Retirement and Terminal Benefits has been issued to Pension Fund Administrators (PFAs) for immediate implementation.
The revised regulation mandates PFAs to make efforts to ensure that all documentation preparatory to the retirement of the RSA holder should be provided and concluded within a period of four months prior to the date of retirement, in addition to guiding the process of accessing retirement and terminal benefits by pension contributors and retirees under the CPS.
The PenCom Boss said the key highlights of the Revised Regulation include clarifications and simplification of documentation processes, Retirement Savings Account consolidation before payments of retirement benefits, accrued pension benefits for private sector contributors, and additional lump sum payments.
The revised regulation stated that the retirees shall be allowed to access an additional lump sum after the payment of the initial lump sum provided that there are additional inflows of funds into the RSA from the employers.
However, the additional remittances shall first be applied to augment the pension up to 50 per cent of the retiree’s final salary while the balance may be paid out as a lump sum.
Where the retiree’s pension is already up to 50 per cent of the final salary, the retiree may choose to collect the entire additional remittances as a lump sum.
Where the additional inflow into the RSA of a retiree-on-Retiree Life Annuity is not up to N100,000, the amount shall be paid directly into the retiree’s bank account, subject to the commission’s approval.
The Revised Regulation also contains several new provisions on Pension Enhancement, Voluntary Contributions, payment under the Micro Pension Plan, payment of benefits of missing persons, and payment of Nigeria Social Insurance Trust Fund benefits.
To ensure strict adherence by Pension Fund Administrators, the PenCom DG said the Revised Regulation also introduced Administrative Sanctions on PFAs who disregard the provisions of the Regulation.
“The sanctions are to ensure that PFAs promptly process the payment of retirement benefits to retirees,” she added.
Disclosing that the Pension Fund Assets have grown to N14.27trn as of June 30, 2022, Dahir-Umar reaffirmed the Commission’s commitment to creating awareness and holding social dialogue on the workings of the Contributory Pension Scheme with relevant stakeholders towards the smooth implementation of the Contributory Pension Scheme in Nigeria.
Credit: InsideBusiness
