Ensuring the Success of the Micro Pension Plan, a Publication by Pension. – PensionNigeria

Ensuring the Success of the Micro Pension Plan, a Publication by Pension.

Micro Pension

One of the major objectives of the Contributory Pension Scheme (CPS) is to assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age.

At inception of the CPS, only the formal sector was covered. However, with the 2014 review of the Pension Reform Act (PRA) the informal sector was included in the CPS. The Micro Pension Plan (MPP) was thus conceptualized with the strategic objective of expanding pension coverage to the informal sector, which captures a significant part of the active workforce.

The National Pension Commission (PenCom) initiated the MPP pursuant to the provisions of the Pension Reform Act 2014, which enables workers in private sector organizations with less than three employees as well as self employed persons to participate as contributors under the CPS. In ensuring that the MPP is fit-for-purpose, PenCom had conducted extensive consultations with relevant stakeholders such as the Labor Unions, Trade groups and Professional Associations.

Since the launch of the MPP in March 2019 by His Excellency, President Muhammadu Buhari, a total of 69,310 participants had been registered by PFAs and total contributions stood at N161.27 million as at June 30, 2021. There are enormous potentials of the informal sector in Nigeria which comprises 80.4 percent of Nigerian employment, according to recent World Bank figures. PenCom is therefore optimistic about consistent growth in the number of participants and attendant accumulation in the MPP assets.

Features of the MPP

The features of the MPP which distinguish it from the mandatory CPS include the following:

Flexibility of contributions

The framework for implementation of the MPP issued by PenCom has considered the non- homogenous nature of the informal sector participants with respect to regularity of income. Therefore, under the MPP, there are no fixed amounts for periodic contributions, thus allowing participants to contribute whenever they realize some income. There is no specified amount for contributions. They can be made daily, weekly or monthly but have to be made at least once a year.

Accessibility of funds

Considering the circumstances of most potential MPP participants, the need for withdrawal to meet urgent financial contingencies was also recognized. Consequently, the MPP contributions are split into 40 percent and 60 percent for contingent withdrawal and pensions respectively.


The minimum age for registration under the Micro Pension Plan is 18 years. These tailored features of the MPP such as flexibility of contributions and access to a portion of the funds in the participants’ Retirement Savings Accounts (RSA) before retirement are intended to obviate the restrictions of the mandatory CPS and thus encourage participation in the MPP.

In its unwavering commitment to the success of the MPP, PenCom recognizes the significance of sustained enlightenment in order to boost the confidence of stakeholders. Ultimately this would drive the achievement of the goals of the Micro Pension Plan which include minimizing old-age poverty and enhancing, financial inclusion in Nigeria.

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