The National Pension Commission (PenCom) did not meet its Corporate Vision as at December 2020. PenCom’s Corporate Vision is “By 2020, to be a pension industry with 20 million contributors delivering measurable impact on the Economy”. The total RSA registrations as at December 2020 was 9,215,788 which is far less than half of its contributors target for the industry as at December 2020.
PenCom in March 2019 launched the Micro Pension Scheme which was expected to boost RSA registrations but unfortunately that has not helped as the total estimated RSA contributors for the Micro Pension Scheme as at December 2020 would probably be less than 100,000 contributors. PenCom in its monthly report for total RSA registrations as at December 2020 did not breakdown the RSA registrations per Fund but as at September 2020 quarterly report released by PenCom, the total contributors for Micro Pension Scheme was 58,800.
PenCom’s inability to meet its Corporate Vision 2020 contributors target was slightly worsened by the necessary data clean up exercise in the industry and the unplanned COVID-19 pandemic. The data clean up exercise mandated every RSA contributor to update their records with their PFA in an attempt to identify contributors who have more than one PFA and invalidate duplicated contributors count. The COVID-19 pandemic, the subsequent lockdown and adverse effect on the economy, reduced activities in the labour sector which reduced the number of new RSA registrations by PFAs.
Going forward, PenCom needs to change its Corporate Vision as regards RSA contributors and go back to the drawing board in conjunction with the operators to determine when they think the industry can achieve 20 million contributors and draft the road map to achieve it with responsibilities shared among operators.
PenCom also needs to give incentives (i.e PenCom fee waiver to operators) to performing operators or find ways to sanction non-performing operators on Micro Pension Scheme. In our opinion, operators are not pushing enough for Micro Pension Scheme, it’s clear that Micro Pension Scheme involves registering low income contributors who will not really increase the Assets under Management (AUM) of the operators, which is what the operators income is based on, but will mostly increase the number of their contributors and the cost of providing services to the contributors.
Micro Pension Scheme remains the major way to increase the number of contributors in Nigeria because majority of the working population in Nigeria falls under the informal sector.
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