The National Pension Commission has announced its initiative to integrate over 60 million informal workers into the national pension scheme.
This strategic move aims to expand pension coverage and provide financial security to a significant portion of the workforce currently outside the formal pension system.
The Commission is working on frameworks and policies to facilitate this integration, which is expected to enhance the overall sustainability of the pension system in the country.
This was disclosed by the Director-General of PenCom, Mrs Omolola Oloworaran, during a one-day capacity-building workshop by the Labour Writers’ Association of Nigeria, themed “Challenges of Nigeria’s Economic Downturn: Survival Options for Workers”, which was held in Lagos recently, according to The Punch.
Oloworaran said, “By expanding pension coverage to this underserved sector, the initiative seeks to provide greater financial security and sustainable retirement options for workers in the informal economy to avert the pressing issue as millions risk retirement poverty.”
Recent data from the National Bureau of Statistics indicates that the informal sector constitutes more than 65 percent of Nigeria’s workforce.
Despite the informal sector making up over 65 percent of Nigeria’s workforce, only about 12 percent of the working population has any form of retirement savings.
This leaves millions at risk of old-age poverty, underscoring the urgent need for initiatives like the National Pension Commission’s plan to integrate informal workers into the national pension scheme.
Oloworaran, stated, “The nation is undergoing some economic challenges, even when we look at it from a global perspective, these challenges abound globally, although every country will have its peculiar challenges.
“For us at PenCom, the contributory pension scheme has always been supporting workers because they are the bedrock of support that helps the contributory pension scheme,” she stated.
Despite the economic challenges, she noted that the pension fund assets that were under management had continued to grow.
“Today, pension assets are about N20.8 trillion as of July 31, 2024, about 10.4 million registered pension contributors.
“There is a provision under the Pension Reform Act that has a resolution for the informal sector. It is evident that the Nigerian economy is largely populated by the informal sector, so the Pension Act has a provision whereby the informal sector workers and those who work in employment that can employ less than three people can participate in the scheme through the micro pension plan,” Oloworaran stated.
She noted that the micro pension plan is particularly beneficial during challenging economic times, as it enables informal sector workers to withdraw up to 40 percent of their contributions.
This provision allows workers with savings to access funds for immediate financial needs, providing crucial support during periods of financial strain.
“Assuming an informal worker has joined the micro pension scheme over the years and come to periods like this, where there are economic challenges, the worker will have something to fall back on, and that is one of the lofty objectives of the contributory pension scheme to ensure that informal sector workers to fall back on, especially when they are no longer able to work,” Oloworaran added.
PenCom launched the Micro Pension Plan in 2019, targeting informal workers such as artisans, market traders, and small business owners.
This flexible, contribution-based pension scheme aims to provide financial security to this largely underserved segment of the workforce.
According to the Nigeria Labour Force Statistics Report for Q2 2023, the informal employment rate stood at 92.7 percent, highlighting the critical need for inclusive pension solutions like the Micro Pension Plan.
