89 per cent Nigerian workers not on pension scheme – NBS

More than 89 per cent of Nigerian workers are not registered under the contributory pension scheme, the National Bureau of Statistics, NBS, has said.

According to a report released by the NBS on Monday, the Retirement Savings Account, RSA, membership distribution data for Q4 2016 reflected that 7,348,028 workers are registered under the pension scheme out of a total working population of 69,470,091 as at Q4 2016.

This, the report said, represents 10.8 per cent of the total working population.

The NBS explained that the trend is not surprising given the largely informal structure of the Nigerian labour force.

It stated further that about 50 per cent of the current workforce are engaged in subsistence agriculture and informal trading, noting that micro businesses for example account for over 90 per cent of total small, micro, and medium scale enterprises, SMEs, in Nigeria.

An analysis of the report shows a total male working population of 36,363,042, with 14.37 per cent representing 5,226,897 registered under the scheme. Similarly, only 2,121,131 representing 6.41 per cent out of a total female working population of 33,107,859 are registered under the scheme.

Also, out of the 7,348,028 RSA members, 71.13 per cent were men and only 28.87 per cent were women. This ratio appears small when compared with the gender split of the working population which has 52.3 per cent and 47.7 per cent men and women respectively.

Meanwhile, the RSA membership is dominated by the private sector.

Analysis shows that the federal government had 1,866,850 registered RSA members under the national pension scheme as at Q4 2016 of which 1,363,266 (representing 73 per cent) were male and 503,584 (representing 27 per cent) were female.

The implication of this, the NBS says, is that there are a lot more male employees in the federal public service than female.

At the state and local government levels, 1,508,471 state public workers are registered under the national pension scheme with 849,493 males representing 56.3 per cent and 658,978 females representing 43.7 per cent. The bureau says this may indicate that the federal public
service is larger than that of all 36 states combined.

Also, similar to the federal service, men dominate with respect to number of employees.

Further analysis of the report shows that private firms had 3,972,707 registered RSA members under the pension scheme as of Q4 2016 of which 3,014,138 representing 75.9 per cent were male and 958,569 representing 24.1 per cent were female.

The NBS said among the three classes of workers registered under the scheme, private firms’ working population dominated the membership distribution and closely followed by the federal and state working population.

Analysis of the age distribution of workers shows that the highest number of registered working population came from the age bracket of 30-39yrs.

It was closely followed by the working population within the age bracket of 40-49yrs and 50-59yrs.

“This is expected considering ages 25-44 account for about 55 per cent of the total working population,” the report stated.

The report also revealed that the least number of registered working population came from above 65yrs and 60-65yrs age bracket.

 

Source: Premium Times

FG To Float Pension Scheme For Self-employed

The Federal Government has said it plans in 2017 to float a micro pension scheme for artisans, mechanics, tailors, traders, hair dressers and other self-employed persons in the informal sector of the economy. While the Contributory Pension Scheme (CPS) introduced under the Pension Reform Act 2014 is working fairly well, it does not capture millions of workers in the informal sector. The same Act established the legal framework for micro pension. Section 2(3) of the Act 2014 extends coverage of CPS to self-employed persons. Government says the pilot phase of the micro pension scheme is expected to kick off by the second quarter of next year through the National Pension Commission, PenCom.

Head of PenCom’s Micro Pensions Department Polycarp Anyanwu said in Calabar that micro pension is an initiative that exists for the provision of pension coverage to self-employed individuals. He said the scheme is an offshoot of the pension industry’s five-year strategic plan to expand CPS coverage to 20 million contributors by 2019. The scheme’s pilot phase would be targeting 250,000 enrolments within six months, he said.

According to PenCom, pension managers have 7.24 million contributors in their network as at September under the formal CPS. The figure represents about 7.7 per cent of labour force and four per cent of contributors in private and public sectors. National Bureau of Statistics [NBS] states that 37.6 million (representing 40.1 per cent) of Nigeria’s 93.5 million adult population operate within the informal sector of the economy.

The informal sector is therefore a critical part of the economy. The scheme engages and extends pension to the larger segment of the working population, to ensure that workers outside the formal sector have something to fall back on when they grow old and retire from active service.

All workers whether in formal or informal sectors must one day retire. Pension is a long-term savings plan that assists workers to plan towards retirement. The federal government’s move is therefore a welcome development. After working hard for a living, a worker deserves peace of mind after retirement. Planning for retirement is one of a worker’s most important decisions.

Possible challenges from the scheme have been identified to include socio-cultural inclinations, documentation challenges, low level of financial literacy, lack of confidence in government, irregular income inflow, low level of ICT literacy, associated transaction costs and low level of education. Other peculiarities of the informal sector include irregular flow of income, highly mobile and flexible jobs, lack of permanent work address, lack of official means of identification, exclusion from pension systems prior to PRA 2014 and high levels of illiteracy.

The envisaged pension scheme for the informal private sector is quite tricky but it will benefit from advancements made in Nigeria’s banking and telecoms sectors in the past decade. The banks have in recent years attracted a lot of informal sector workers into the banking system, which has improved the sector’s organisation and documentation. The banks too have benefitted immensely from advances in telecoms, without which many of their new products and systems would not have been possible. Together these two sectors have greatly assisted the Contributory Pension Scheme. It is the public sector’s transitional pension scheme that is still bedevilled by problems.

Informal sector workers and self-employed persons could as well use the balance in their Retirement Savings Accounts (RSAs) as equity contribution for residential mortgages and support their businesses just as they will benefit from other micro-credit schemes. Pension used to be seen as something for the privileged class but this should no longer be the case in Nigeria. With continued education on saving for retirement, good government, better administration and optimal investment returns on contributions, added to improving financial literacy, the planned introduction of micro pension in the country should provide a better deal for contributors.

Credit: dailytrust

The Nigerian Federal Government to roll out inclusive pension scheme.

The National Pension Commission, (PenCom), said that it has reached advanced stage of unveiling its Micro Pension (MP) project, an initiative that provides pension coverage to self employed Nigerians.

The initiative covers three strata levels, the low, middle and high income earners, targeting 20 million self employed by 2019. The MP project targets mainly artisans, mechanics, tailors, farmers and other forms of businesses in the informal sector.

Head, Micro Pensions Department, Mr Polycarp Anyanwu who disclosed this at a seminar said the Micro Pension Scheme was an offshoot of the Pension industry 5-year strategic plan to expand the coverage of the Contributing Pension Scheme (CPS) to 20 million contributors by 2019.

He said the informal sector is largely uncovered by any structured pension and represents over 70 per cent of Nigeria’s total working population in the country. He said that some of the peculiarities of the individuals that operate within the Informal Sector inter-alia are: Irregular flow of income, highly mobile and flexible jobs, Lack of permanent work address, Lack of official means of Identification and other documents.

He stated that Section 2(3) of the Pension Reform Act, 2014 extended coverage of the Contributory Pension Scheme to self-employed persons but for micro pension they have breakdown of family support and there was need to avert old age poverty.

He said that some of micro pension features was that it has simplified registration process, flexible frequency of contribution, easy method of contribution remittance. He stated that contributions would be split into two, a smaller percentatage shall be savings and accessible to the contributor while the greater per centage shall be strictly set aside for pension, adding that the same individual portable retirement savings account managed by PFAs and funds kept in custody of the PFCs.

He said that strict regulation of the investment of Micro Pension funds needed to guarantee safety and fair returns on investment.

He said the Commission planned to partner with trade Unions/Associations to assist introduce members to the Scheme for the Pilot phase while media professionals expected to assist to enlighten the public and create awareness of benefits and need for MP.

Apart from targeting that 250,000 contributors would be enroll within 6 months the Commission said it will test ICT technology to ensure adequacy.