In two weeks, it will be one year since President Muhammadu Buhari launched Micro Pension Plan. Omobola Tolu-Kusimo beams the searchlight on the plan.
ON March 28, last year, President Muhammadu Buhari launched the Micro Pension Plan (MPP) at the State House, Abuja to bring financial inclusion to workers.
The plan, an initiative of the National Pension Commission (PenCom), is aimed at providing pension services to the self-employed in the informal sector and employees of organisations with less than three staff members.
The informal sector constitutes an estimated 69 million workforce and represents an estimated 88 per cent of workers that lack pension and safety nets for their old age. The goal of the commission is to achieve the coverage of 30 million people in the informal sector by 2024.
The MPP is expected to give self-employed professionals, especially entertainers, lawyers, doctors, entrepreneurs, artisans, and casual workers, the opportunity to save for pension.
Head, Corporate Communications, Peter Aghahowa, stated that the launch attested to the Federal Government’ policy to provide opportunities for financial inclusion and economic stability for more Nigerians in the informal sector.
The Commission also said the launch signifies the commencement of activities that will culminate to the full implementation of the MPP. Accordingly, the National Pension Commission and pension operators will continue the education of the public through campaigns across traditional, social and digital media, while registration of contributors will follow in subsequent months.
But have the Pension Fund Administrators (PFAs) been able to provide the opportunities for financial inclusion. Have they also been able to educate the public as expected to drive the scheme?
Stakeholders industry believe the MPP has not recorded the expected results.
Describing the take-off as slow, the stakeholders believe there is the need for PenCom and the operators to restrategise.
General Secretary, Federation of Informal Workers Organisation of Nigeria (FIWON), Mr. Gbenga Komolafe, in a telephone interview with The Nation, said the MPP doesn’t seem to be working due to some reasons.
He listed the problems militating against the plan as lack of confidence by the public, poor incentive, poor investment by pension operators, and lack of awareness by the public, among others.
He stated that they have tried to strategise, but that the operators have looked away because they are not ready to invest in their plans.
He reiterated the need for the Federal Government to part-fund the MPP by contributing as the workers in the informal sector are doing, noting that the pension is a social security and government has a responsibility to its citizens.
He said: “First of all, there is crisis of confidence by the public. When we try to talk to them, they will say they watch people protesting over the non-payment of pension. This is an area that PenCom and the operators need to address. Secondly, the incentives are too poor. Our strategy is that the Federal Government should partly fund the pension contributions that are expected to be made by our members. People are asking that if they invest under the plan, what will it amount to? If a person invests N200 monthly for instance, what will he or she get in 10 years? But if I contribute N200 and the government adds N100 or N50, then he will be encouraged. For some of our members who have subscribed to the plan, the challenge is for them to make contributions. This is part of the major issues that we listed to the operators in the beginning of the plan.
“Another strategy that we exposed to the PFAs is that they should link our cooperative savings to the plan to aid pension contributions. As a cooperative society, we encourage our members to key into social securities.Thus, we were trying to create a platform where our members will make daily contributions. They contribute whatever is convenient for them and so this gives us a pool of what can be deducted for pension, insurance, and other social security products. The contribution allows for pooling of resources for which we can then encourage our people to buy into the pension plan. At the initial stage, we offered the PFAs the platform, but none of them was willing. But we went ahead to create our platform and we have 2000 people registered. It is unfortunate that the PFAs want what they can control and they think they can continue to use conventional method for the informal sector.”
He said the third issue is poor awareness. “PenCom and operators don’t seem to be serious about creating awareness to the public. Apart from some adverts published by PenCom, there is no serious direct engagement with informal workers.You cannot address people’s fears by being laid back. You have to reach out to them. PenCom needs to take the bull by the horn by taking the lead because my engagement with Pension Fund Administrators (PFAs) shows that they are weary in committing serious funds for advocacy. Some PFAs have confessed that they are not ready to deploy huge funds because what will come to them from the business is so small. So, nothing is really happening,” he added.
The Director, Centre For Pension Rights Advocay, Ivor Takor, also in a telephone interview, believes that the operators need to do better for the scheme.
He urged the operators to invest in awareness and getting people to embrace the plan, stating that they should take contributions they will make as a Social Corporate Responsibility (CSR).
He said the micro pension product is for individuals and so it is difficult to sell.
He however said people were keying into it slowly, noting that even the Contributory Pension Scheme (CPS) that was mandatory would not have taken off fully, if not for the compulsion on the formal sector.
He noted that the economic situation in the country makes it difficult for people to participate in pension plans.
“I agree that operators are not doing much on micro pension as they has not put it on their front burner.This is because something as new as micro pension should be mentioned almost on a daily basis to entrench it in the minds of the people. They need to understand the product and its benefits.
“They must not look at quick returns on their investments. They need to realise that when more people key into it, there will be economy of scale. It may look as if the administrative cost is high, when more people come under the plan, they will reap the benefits.
“The truth is that PFAs are making money from the CPS. They should be ready to give to the less privilege.Where is their CSR? They should see it as such for now before the plan will pick up. They should look at it as a sacrifice while they make money later. It should not be about the astronomical profit they are looking for. Where is the Corporate Social Responsibility as an industry? The industry was not in existence 15 years ago, but it has become a N10 trillion industry. So, why will they not look at it as something to give to the downtrodden people?” he asked.
The President, Pension Fund Administrators Association of Nigeria (PenOp), Mrs. Aderonke Adedeji, said: “There are no new developments. We already identified that the MPP has different characteristics from the main scheme.
“It is not mandatory, so it is going to take time to grow. We need to be patient with it and continue to promote its benefits.”
When asked about stakeholder’s perception of the operator’s low awareness creation, she said they are doing their bit.
But Pencom Head of Corporate Communications, Mr. Peter Aghahowa told The Nation that there was the need for them to restrategise.
Aghahowa said the Commission is also not happy with the achivements of the MPP in one year, adding that they have plans to move it forward.
“It has been challenging and the report is not as we want it. We will be meeting with the PFAs very soon.
“The strategy when the product was launched was that PenCom as the regulator will stand behind operators as they go to the market with the product because they are the one in the business.
“We expect awareness of the people to be a collaborative effort. We believe that it cannot be left for one of the parties to do.
“But we have learnt that we need to have something more coordinated to achieve the objectives of the MPP”, he said.
But AIICO Pension Limited seem to be the only company that has introduced the product to its customers and the public.
The Managing Director, AIICO Pension, Mr. Longe Eguarekhide , at the MPP launch said it had been difficult to find people take up the micro pension, prompting the company to look at the environment very carefully to carve a niche entry for the product and then build on it.
He said in trying to break the jinx around micro pension, the company designed the product entitled: “Gift-a-Pension” for employers of domestic staff and personal aides.
He said the product will enable the employers reward their personal and domestic staff by giving them the product and contributing for them regularly.
“We have looked all over the globe and found that the pension scheme is a very potent way of developing the informal sector pensions.”
The Head, Strategic Planning and Corporate Communications, AIICO Pension, Mr Olubankole, added that they realised that the MPP is not gaining the kind of traction it should get because a lot of people who wanted to key into it could not afford it.
“Yes, pension is for everybody but the truth is that it is not cheap. It takes dedication, understanding and good disposable income. We realise that a lot of people do not have the extra disposable income to give for pension and so we came up with the initiative of ‘Gift-a-Pension’, where people who have a little extra can give that pension, which is a gift of a lifetime to domestic staff. This product takes the burden off this people to their sponsors.
“Also because we understand that sponsors usually have busy schedules, we have put in place a seamless process with a technology platform that would enable them to purchase the product from their mobile phones,” he added.