The Micro Pension Plan, Securing The Future of Informal Sector Workers, a Publication by PenCom – PensionNigeria

The Micro Pension Plan, Securing The Future of Informal Sector Workers, a Publication by PenCom

The informal sector constitutes the vast majority of the working population in Nigeria. The informal sector, which employs a wide range of individuals such as the self-employed, domestic workers and professionals amongst others, is largely heterogenous. These categories of workers, along with those of organizations that employ less than three employees are not mandatorily covered by any retirement benefit scheme.

Section 2(3) of the Pension Reform Act, 2014 makes provision for employees of organizations with less than three employees, self-employed persons, and persons operating in the informal sector to participate in the Contributory Pension Scheme (CPS) under the “Micro Pension Plan” (MPP). The MPP provides pension to the aforementioned category of workers who are not mandated to participate under the CPS.

Participation in the Micro Pension Plan

Any person who falls under the category mentioned above and desires to participate in the MPP, is required to undergo registration with any licenced Pension Fund Administrator (PFA) of their choice. Registration involves opening a Retirement Savings Account (RSA) by completing a registration form. Once the RSA is opened, the Micro Pension Contributor (MPC) is issued with a Personal Identification Number (PIN) by the PFA.

Self-employed persons that belong to a Trade, Profession, Cooperative or Business Association; persons with a business name registration, partnership or enterprise; Employees operating in the informal sector who work with or without formal written employment Contract; and Other self-employed individuals are eligible to participate in the MPP. Such individuals, should be at least 18 years of age, and are required to be resident in Nigeria.


The Micro Pension Contributor can make contributions on a daily, weekly or monthly basis, as may be convenient. These contributions can be made by cash deposit, electronically, through any payment platform or financial services agents approved by the Central Bank of Nigeria.


The Micro Pension Contributions are invested by the PFAS in safe investment outlets that are regulated by the National Pension Commission (PenCom). Therefore, the savings are expected to increase over time due to yields from the investments.

Contingent Withdrawals

Every contribution made by the Micro Pension Contributor shall be split into two comprising 40% for Contingent Withdrawal and 60% for Retirement Benefits. The MPC will be eligible to access the Contingent portion of the contribution 3 months after making the initial contribution. Subsequently, Contingent Withdrawals can be made once in a week from the balance of the Contingent portion of the RSA.

The MPC can choose to convert the Contingent portion of the contributions to the Retirement benefits portion at the end of every year, and may also transfer their Retirement Savings Account from one PFA to another in line with the RSA transfer regulations.

Retirement Benefit Payments

The MPC will be eligible to access their Retirement and Terminal Benefits upon attaining the age of 50 years, upon retirement and or on health grounds. Also, upon retirement, the MPC has the option of transferring part or all of their outstanding balance on the Contingent portion to their Retirement Benefits portion.


Upon securing employment in the formal sector with any organization that has three (3) or more employees, the Micro Pension Contributor will be eligible to participate under the mandatory CPS. However, once the Micro Pension Contributor joins the mandatory CPS, he/she cannot convert back to the Micro Pension Plan.

Implementation Update

Since the Presidential launch of the MPP by President Muhammadu Buhari, the total number of registered Micro Pension Contributors is 71,434, while the total number of Micro Pension Contributions is N196.64 million as at 30 September 2021. Registration of MPP contributors is growing by the day.

However, as the Pension Industry intensifies its public enlightenment campaign, the coverage is expected to be enhanced with more contributions by the participants.

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