Informal sector workers enroll in Micro Pension Plan
By Jeph Ajobaju, Chief Copy Editor
Registration in the Micro Pension Plan (MPP) increased to 73,600 in December 2021, up from 72,000 in November, according to the latest quarterly report of the National Pension Commission (PenCom).
MPP is for the informal sector, such as the self-employed or organisations that cannot participate in the Contributory Pension Scheme (CPS) because they do not have a minimum of three employees as specified by the CPS Act.
“Nineteen (19) PFAs registered 2,166 contributors during the quarter under review. This brought the total number of Micro Pension contributors to 73,600 as of 31 December 2021.
“Similarly, the sum of N25,094,874.26 was credited into the RSAs of 8,260 MPP Contributors in Q4 2021, bringing the total value of the Micro Pension Fund to N224,054,870.69 as at end of the quarter under review,” PenCom said.
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MPP participants contribute N106m
PenCom also disclosed that
- Total contribution of informal sector workers increased by N16.71 million to N106.3 million in the first quarter ended March 2021 (Q1 2021), up from N89.68 million in Q4 2020.
- Pension Fund Administrators (PFAs) enrolled 3,292 contributors into MPP in Q1 2021.
- 39 MPP participants converted to the mandatory CPS and N596,339.27 was transferred to their Retirement Savings Accounts (RSAs).
- This brought total conversion balance to N3,680,292.77 from 259 MPP contributors in Q4 2021.
The International Labour Organisation (ILO) estimated in 2018 that 93 per cent of all employment in Nigeria is informal, with 95 per cent of women working in the sector compared with 90 per cent of men, per reporting by Nairametrics.
SBM Intelligence found that 40 per cent of Nigerians say they are being owed wages in the unregulated informal sector.
It also discovered that 98 per cent of informal economy operators pay taxes daily, with some businesses paying three times a day.
In Lagos, for instance, some commercial bus drivers pay as much as N3,000 a day in taxes to different groups.
MPP components
PenCom Micro Pension Department Head Dowda Ahmed disclosed last December that 72,000 participants registered in the MPP as of November 2021.
MPP is for the informal sector, such as the self-employed or organisations that cannot participate in the Contributory Pension Scheme (CPS) because they do not have a minimum of three employees as specified by the CPS Act.
“These include small-scale business owners, petty traders, artisans, and entrepreneurs, among others.
“The micro pension was put in place to curb old-age poverty by assisting people to contribute while working and have long-term savings they could fall back on when they become old,” Ahmed explained.
“MPP is based on individual and personalised Retirement Savings Account (RSA), as only the RSA holders have access to the balance in the account.
“There is separation of management and custody of the pension funds which ensures that Pension Fund Administrators (PFAs) who manage the fund do not have direct access to them as the funds are kept by the Pension Funds Custodians (PFCs).”