Onyekwere Iwuagwu, an expert in the pension industry has urged government to provide the necessary frame work that will facilitate implementation of Micro-Pension.
Iwuagwu, a pension services consultant explained that aspect of pension will give informal sector workers financial security at retirement.
Speaking in Abuja, he said that the initiative is currently being pursued by the National Pension Commission (PenCom).
He said if realised the initiative would lead the marginalised section of the society towards a better and more financially secured future.
According to Iwuagwu, “Before now, pension used to be seen as something for the privileged class, particularly those that worked, working or hope to work for the various tiers of government as well as those in paid employment in the formal sectors.
“This is notwithstanding the fact that old age poverty is not limited to workers in the organised sectors because no matter how long a self-employed person decides to work age will eventually retire him.”
He said that is why the Pension Reform Act, 201, by way of Micro Pension, is seeking to ensure that this class of Nigerians have something to fall back on when they grow old and retire from active service.
The Pension services consultant cited an article by Stuart Rutherford, on Micro Pension, ‘Micro-pensions: Old Age Security for the Poor?’ in which the writer observed that “poor people well understand the purpose and value of saving.
They sense that there may be a savings route to old-age security, and grab opportunities when they come their way. But they are beset by many difficulties, both in their own circumstances and in the financial services available to them, so that in practice success remains the exception rather than the rule.”
The expert noted that most poor people across Nigeria at in their life time combine self-employment, casual employment, low-grade and formal employment, full-time, part-time and intermittent employment respectively.
“For the poor and vulnerable, two types of pension could be provided.
The first is public or social pension, where the state raises revenue and redistributes to citizens when they reach a stipulated age in order to guarantee them a dignified life and Micro-Pension, a personal retirement savings plan.
But because of paucity in government revenue and failure of the traditional pension system, the first one is not tenable in Nigeria today, he said.
“Micro Pension is therefore a programme that seeks to give a chance to the poor and marginalised working class people to live a comfortable life at the end of formal work, it builds up retirement income for them.
A defined contribution scheme, micro-pension is basically a long term voluntary savings plan that accumulates over a long period, in order to yield returns at a later date.
Savings are managed and invested in financial or capital markets by professional fund manager at low costs, accessible to poor customers.
The accumulated fund could be drawn in retirement by way of lump-sum payment, annuity or some combination of both” he said.
PenCom recently said the Micro Pension programme has kicked off targeting about 50 million self-employed persons and informal sector workers into the CPS.