A] Prelude
For more information on pension systems, risk and coverage, feel free to visit our dedicated webpages:
https://expatpensionholland.nl/global-pillars-systems
https://expatpensionholland.nl/global-investments-risks-0
https://expatpensionholland.nl/global-social-security-coverage
B] The Issue
The Micro Pension Plan (MPP) goes beyond savings, it is also about creating wealth. The plan, which covers informal workers with pension coverage, empowers millions of Nigerians to transition from economic vulnerability to financial security.
These were the submissions of the Ag. Director General of the National Pension Commission while speaking at the recent Micro Pension Plan Industry Stakeholders’ Engagement Forum held in Lagos. The forum brought together key stakeholders from the financial services, technology and policy sectors to discuss the evolution of the MPP and its potential to uplift millions of Nigerians.
Speaking on the theme: “Reimagining Micro Pension Plan: Balancing Service, Policy, and Health,” she highlighted the transformative power of the MPP in offering financial security to Nigeria’s informal sector workers— an essential yet underserved demographic in terms of pension coverage.
Mrs. Oloworaran said over 77.5 million Nigerians, including traders, artisans, small-scale farmers, and transport operators, currently works outside the formal pension system. She noted that while these workers contribute significantly to the nation’s economy, many are left without a safety net, vulnerable to economic shocks as they age.
She stressed the fundamental role of the MPP in providing this crucial safety net. She explained that families with stable income streams in retirement can afford better healthcare, send their children to school, and invest in small businesses, further contributing to economic development.” The Acg. PenCom DG further stated that the MPP, launched in 2019, aims to give informal workers a chance to save small amounts regularly towards their retirement.
“By offering flexible and affordable contribution plans, the initiative helps reduce the cycle of poverty that many Nigerians face in old age. There is a direct connection between financial security and economic development. Globally, pensions are a tool for long-term wealth creation.”
“Currently, pension funds in Nigeria amount to over N21 trillion, representing a critical source of capital for infrastructure projects, healthcare, and other vital sectors. Increasing participation in the MPP could significantly boost these funds, driving national growth while improving the financial security of millions of families”.
While reimagining the MPP at the forum, Ms. Oloworaran highlighted the alignment of the MPP with President Bola Ahmed Tinubu’s administration’s focus on economic inclusivity and poverty reduction. “By integrating informal workers into the formal financial system, the MPP plays a crucial role in the government’s vision for national economic growth. “Pension funds are not justfor the benefit of retirees.
“They are a vital part of our nation’s economic infrastructure. The more people participate in the MPP, the more funds we can mobilize to drive long-term growth”, she added. PenOp President, Christopher Bajowu, on his part, said the MPP has a large growth potential.
Donald Onuoha also said the MPP requires a little tweak to achieve its potentials. On the significance of the MPP, Mr. Bajowu said millions of people in the informal sector are getting old without pensions. “It’s in our best interest to ensure that we work together to get as many more people on a Self-Sponsored Pension Plan which in Nigeria, we refer to as Micro Pension Plan,” he said.
The PenOp President stressed the need for deepening of financial inclusion through the MPP to ensure that more people are included in the formal financial system. He commended PenCom for commitment to growing the informal pension space. As highlighted by stakeholders at the forum, increased participation in the MPP can drive both personal financial stability and broader economic development.
With continued commitment from PenCom and industry players, the MPP has the potential to be a transformative tool for poverty alleviation, financial inclusion, and long-term wealth creation in Nigeria.
C] Finally
It is very interesting to see that the private pension plans are gaining momentum and also include workers in the informal sector. This not only in Nigeria but for example also in China and Chili. Cost wise such a plan might not be ideal but it is a start that can be effective as long as it is combined with income tax benefits.