The Arena

Pension operators under the Contributory Pension Scheme are developing framework to allow about 15 million artisans have Retirement Savings Accounts using the mobile money platform.

Although, the Pension Reform Act 2004 does not allow the informal sector to have accounts with the Pension Funds Administrators, individuals and groups, under this arrangement will soon be allowed to join the scheme, when the National Pension Commission releases the guideline on this, it was learnt.

The Managing Director, ARM Pension Managers (PFA) Limited, Mr. Sadiq Mohammed, confirmed this to our correspondent in an interview.

“One of the approaches the industry is thinking of is to use mobile money phones and platforms to access the informal market,” he said.

Although, the mobile money platform in the country is not fully developed, Mohammed said  operators were working on how to build it into the framework for the informal market.

The ARM PFA boss noted that the guideline for the informal sector was still under review, adding that there was a draft issued by PenCom.

He said there was a need to review it further because the informal market was not as organised as the formal market.

“There is a lot being done to develop the framework for the informal sector because we are talking of associations, cooperatives and so on. The informal sector is segmented and widely distributed,” Mohammed said.

Allowing the informal sector into the CPS is one area the operators are expected to experience a boost, according to experts.

The immediate past Chairman, Pension Operators Association of Nigeria, Mr. Dave Uduanu, said operators assessed the pension scheme from inception and tried to chart a growth map for it.

“We looked into the scheme from inception and proffered ways on how to grow the number of contributors in the sector from over five million to 20 million by 2017,” he said.

With the informal sector coming in, he said, the industry would grow better.

“We believe we can grow this sector by 10 million in this period. And by that, we can grow our target population from 5.2 million to 20 million, which is our target in the next five years,” Uduanu said.

The Chief Executive Officer, Stanbic IBTC Pension Manager, Mr. Demola Sogunle, observed that a high percentage of Nigeria’s working population was operating in the informal sector of the economy.

“It is important to bring workers in this sector into the new pension scheme in order to raise the coverage ratio from the current level of less than eight per cent of the working population,” he said.

According to him, the pension operators need to extend the benefits of the new scheme to many Nigerians.

A coverage ratio of about 25 per cent, he added, would translate to touching the lives of about 18 million Nigerians.

He said the impact of this on the economy and the social wellness of average Nigerians would be enormous.

Sogunle noted that PenCom was currently reviewing the guideline which would govern the inclusion of this set of people into the CPS.

“We believe that the continued awareness of the CPS will also go a long way in getting more people onboard,” he said.

To cater for this obligation, the PRA 2004 was officially introduced to take care of the future of Nigerian workers.

The PRA 2004 ensures a contributory scheme for the payment of retirement benefits of employees of the public service of the federation, the federal capital territory and the private sector, thus, leaving out the informal sector.

By virtue of section 11 of the Act, every employee is to maintain an individual RSA account in his name with any PFA of his choice and notify his employer of the identity of the retirement savings.

The Act states that the PFAs should manage the pension funds, while the PFCs hold the funds and assets.