The Micro Pension Plan (MPP), designed to provide retirement security for self-employed and informal sector workers, is struggling to gain momentum as economic hardship continues to weigh heavily on potential contributors.
Eligible individuals and small-scale businesses are citing rising cost of living and unstable income as major barriers to participation, raising concerns about the scheme’s long-term viability and the need for revamp.
Data from PenCom’s Performance Dashboard for the first quarter of 2025 shows that out of 176,617 registered participants from inception of the scheme, only about 12, 940 are funded, with 163,677 unfunded.
This is despite efforts by the National Pension Commission (PenCom) and Pension Fund Operators Association of Nigeria (PenOp) to promote the initiative with incentives and flexible packages.
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Bola Olubumi, an importer and dealer of women’s clothing at Mandalas in Lagos Island, employs three workers across the two fully stocked shops she operates.
She would have loved to enrol her workers in a micro pension plan, but she hasn’t been able to do that due to a recent drop in sales and income.
“We are not making money like before, and some of my workers prefer to receive their full salary every month so they can take care of their children,” she said.
According to Olubumi, the salaries they pay are relatively small, making it difficult for the workers to save, especially with the high cost of living, transportation, and food. “Everyone is just managing,” she added.
When asked whether micro pension has been introduced to her before, she said yes, but noted that most traders are more familiar with traditional ajo (contribution) systems.
Ugo Ezim, an estate surveyor and property valuer based in Port Harcourt, Rivers State, has two employees on his payroll. He said income from the business is irregular and unpredictable.
According to him, the economic and business environment has been very challenging for some time, making it difficult for her to plan ahead, including saving for retirement.
“We would like to save, but there are a lot of pressing needs including office rent, fuel for the generator, electricity bills, waste management fees, and many other expenses,” he said.
When asked whether he was aware of micro pensions, Ugo replied, “Yes, I am aware of the product because I read about it.”
Omolola Oloworaran, director general, PenCom, said recently that the Commission is embarking on revolutionising the micro-pensions scheme, noting that it has now been renamed the ‘Personal Pension Plan.’
“It has been re-engineered for scale, technology enablement, and deep penetration into the informal sector and would be launched soon,” she said
The Pension Reform Act (PRA) 2014 expanded coverage of the CPS to the self-employed and persons working in organisations with less than three employees through the introduction of Micro Pension Plan in 2019.
Read also: Micro pension adoption seen riding on healthcare incentives, flexibility
This category of workers constitutes the larger percentage of the working population in the country and aligns with the pension industry’s strategic objective of covering 30 percent of the working population in Nigeria under the CPS.
In addition, due to their widely dispersed nature and generally low and irregular incomes, the industry saw the need to provide a pension plan that would meet workers’ special characteristics. In this regard, the Micro Pension Plan initiative was conceived within the context of an industry-wide strategy to bring this class of workers on board.
In implementing this initiative, the informal sector was segmented into three broad categories: low-income earners, the high-income earners and the Small and Medium Scale Enterprise (SMEs).
Each of these categories was targeted with pension products, and sensitisation programmes were carried on to meet their peculiarities.
With the expected result not forthcoming after six years of launch of the scheme, PenCom, alongside pension fund operators, are working to revolutionise the scheme waiting to be launched soon.
