Pension: Over 37.3m adults face risk of old age poverty

Over 37.3 million adults in the informal sector face the risk of old age poverty, as the informal sector workers are isolated from the formal pension arrangements.

Chairman of Pension Fund Operators Association of Nigeria, PenOp, Ronke Adedeji, who disclosed this said that 18.4 million adults which represent 19.1 percent of the total adult population, have farming as their main source of income while 18.9 million adults which represent 19.6 percent of the total adult population get their income from own business.

Adedeji, who is also Managing Director of Leadway Pensure PFA Limited, said that the micro pension is an arrangement for the provision of pension and retirement benefits to the low income, self-employed and persons operating in the informal sector. She stated: “Micro pension is for protection against the vagaries, unpredictability of old-age poverty. The formulation of such schemes require a delicate balance between economic viability, generation of adequate returns and customized features for the participants.

To succeed, it needs to properly address administrative, design and efficiency issues.” Adedeji said that the Pension Reform Act, PRA 2014, paved the way for micro pension, adding, “Employers of organizations with less than three employees as well as self employed are entitled to participate under the scheme in accordance with guidelines issued by National Pension Commission, PenCom.” She said that the informal sector plays an indispensable role in Nigeria and world economies as it generates jobs, amplifies entrepreneurial undertaking, reduces unemployment and underemployment, alleviates poverty as well as promotes economic growth. She listed the attributes of informal sector workers to include continuous job changes, likely opts to self-employment, not on payrolls in most cases, temporary nature of employment contracts, may be illiterate or semi-illiterate and unfamiliar with the workings of pensions, limited experience in dealing with formal financial institutions, as well as frequent need for liquidity.