Nigeria’s micro pension plan explained

Nigeria's micro-pension plan has been a long time coming, with discussions dating back to 2014 and finally seeing implementation in 2019. The government aims to extend pension services to the informal sector, which constitutes about 70 million people in Nigeria and contributes over 40% of the GDP. The micro-pension scheme is designed to bring this significant part of the population into the formal pension system to ensure financial security in their old age. The delay in the implementation of the micro-pension scheme can be attributed to the need for thorough sensitization and engagement with various stakeholders in the informal sector. Niyi Falade, CEO of Crusader Sterling Pensions, highlighted the importance of working closely with associations, trade groups, and agencies to ensure the success of the scheme. After over 15 months of sensitization, registration for the scheme has begun, signaling a significant step forward in achieving the target of 20 million pension contributors from the informal sector by 2019 and 30 million by 2024. The collaboration between regulators, operators, and technology is crucial to overcoming challenges associated with documenting a large population of informal sector workers. Leveraging mobile banking and partnerships with telcos and agents, the operators are streamlining processes such as registration, contributions, and eventual withdrawals, making the scheme more accessible and user-friendly for the target demographic. The micro-pension plan not only aims to increase financial inclusion but also to address the issue of old age poverty in Nigeria. With unemployment on the rise, there is a growing concern about the financial well-being of the elderly population in the future. By bringing millions of Nigerians into the pension system and managing their contributions effectively, the scheme seeks to provide a safety net for retirees and reduce the risk of old age poverty. In a conversation with CNBC Africa, Niyi Falade emphasized the strategic benefits of the micro-pension scheme, including financial inclusion, asset management growth, and poverty alleviation. He highlighted the role of technology in simplifying processes for informal sector workers and expressed confidence in the achievability of the set targets. By leveraging existing infrastructure and modernizing pension operations, Nigeria's micro-pension plan is poised to make a significant impact on the financial landscape of the country.