The National Pension Commission has reiterated that it will redesign the Micro Pension Plan to boost financial inclusion especially in the informal sector.
This was disclosed at the 2025 Annual Conference of the Nigerian Association of Insurance and Pension Editors, with the theme, “Strengthening Insurance and Pension Frameworks For Better Economy.”
Micro Pension Plan is an arrangement under the Contributory Pension Scheme that allows the self-employed and persons working in organisations with less than three employees to make financial contributions towards the provision of a pension for their retirement or upon incapacitation.
Speaking at the conference, the Director-General, PenCom, Ms Omolola Oloworaran, who was represented by Head, Corporate Communications, PenCom, Mr Ibrahim Buwai, averred that the majority of the Nigerian workforce are in the informal sector.
He said, “Let’s talk about this issue of expanding the Contributory Pension Scheme towards increasing financial inclusion to grow the informal sector. Even though the data out there of the Nigerian labour force says 70 million or 80 million or what have you. Be that as it may, the consensus there is that the labour force out there largely resides in the informal sector.
“How do we bring the informal sector under the contributory pension scheme? It is even more important in a country like Nigeria, where the social safety net is not that strong. So pension is what we come in handy in terms of providing that social safety net.”
The Micro Pension Plan was launched in 2019 by the National Pension Commission (PenCom), but unfortunately, it has not gained much traction as it has only about 200,000 contributors registered under that plan with an asset of about a billion naira, which is very insignificant.
“What we are engaged in doing now is looking at totally redesigning that product. And in the next few weeks, we are going to come out with a newly branded micro pension plan now called Personal Pension Plan. We recognised the issues with the product. One of the key element of the product is that that product is going to be stratified into three strata because we recognise that that sector is not micro it is not only captures people who are down the ladder – the artisans or what have you, it also takes care of people who are up there, the entertainers, the sportsmen who are doing a one man thing These people need to be taken care in the plan and there will be a section in the new plan for them.
“But the most important thing is to address the challenges especially around onboarding. I am happy because even the presenter mentioned technology-enabled onboarding, so that is part of what we are looking at. We will put technology in place so that onboarding can be as simple as going to the POS to withdraw or to lodge money,” Buwai said.
The PenCom spokesperson also disclosed that with the increase in FinTech, the regulators were considering adding a Super Agent who would come in and do the onboarding on behalf of the PFAs.
“This speaks to the issue that we need to license Micro Pension PFAs so that this model will enable us to achieve that purpose,” he noted.
Regarding the deployment of pension fund to economic development, PenCom said that it was one area it was focusing on.
“At the moment, we are renewing impetus in terms of seeing pension funds are invested in infrastructures, private equity etc. This is a two-pronged approach. Apart from the issue of economic development, we are also worried about the real return on investment for the benefit of the retirees and contributors.
We are also aware that the recent inflation bite seems to reduce the real purchasing power and that is what is affecting the retirees also.”
Also speaking at the conference during a panel discussion, Head of Operations, Pathian Partners Limited, Adetunbi Ashaye, called for education to boost support for the Contributory Pension Scheme amid calls from some retirees to exit.
Ashaye said, “People want to exit because they believe that when they retire, what they will get will be too small and they want to get everything forgetting the fact that the whole essence of pension reforms is the fallout of what was happening before and what is where people will retire without getting anything because it was unfunded. Now that it is funded through the contributions of the employees and the employers, it is trackable and highly regulated.
“What really needs to happen is the need to drive financial literacy because people in Nigeria see pension as insignificant, something that is not important. They see insurance and pensions as unnecessary. Their concern is that if they cannot provide for their immediate needs, which are food, shelter and clothing, why should they save? And it still boils down to Micro Pension Plan, and when you put that together, what should be happening in the industry now, as one of us has said, is to simplify, digitise the micro pension plan, and ensure diversification in different ways so that we can reach out to everybody.
“If you look at the industry at the moment, the pension asset is projected to be about N29 trillion at the end of the year, because as at the end of June, it was N24.6 trillion. There is also the certification of asset classifications, and what we need is transparency, which is what PenCom are doing; people are looking and seeing how the funds are growing. If you look at the pension performance in the first quarter, 2025, N79 billion was paid for Programme Withdrawal (WP) and N54 billion for Annuity.”