Modestus Anaesoronye
Nigerians in both formal and informal sectors of the economy can now make pension savings from their ‘side hustles’ through a new window allowed by the National Pension Commission (PenCom).
The opportunity is coming from the relaunch of the Micro Pension Plan (MPP) into an expanded scheme called the Personal Pension Plan (PPP), which seeks to democratise retirement planning across all demographic levels of the population.
PenCom recently issued a guideline on Personal Pension Plan (PPP) as framework for extending pension coverage to self-employed persons, including workers in the informal sector who are not mandatorily covered under the Contributory Pension Scheme (CPS).
The guideline also covers employees in the formal sector who are mandatorily covered under the CPS, but who may wish to make additional flexible contributions outside the mandatory scheme.
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According to Omolola Oloworaran, director-general of PenCom, “Individuals can now contribute directly to their Retirement Savings Accounts (RSAs) without going through an employer,” she said, noting that the programme is intended to boost participation among Nigerians, particularly people in the informal sector, where there are over 70 million uncovered workers.
“Voluntary contributions before had some limitations. You could only go through your employer to contribute. Now, we are saying we have to democratise everything, just as we are doing with the informal sector. So, you now decide to contribute for yourself. So, these are the major changes that we are talking about.”
Nike Bajomo, executive director/ head of Business Development at Stanbic IBTC Pension Managers, commenting on the new window said, any Nigerian regardless of job or income source has the right to open a PPP account now and begin saving for retirement.
“The PPP also allows contributors to access up to 50 percent of their contributions just three months after opening the account. So, with every contribution, 50 percent is accessible, while the other 50 percent is reserved strictly for retirement.”
Bajomo said this flexibility makes it much more appealing to Nigerians, noting that Nigerians can choose to contribute weekly, monthly, quarterly, or even after closing big contracts.
“It is entirely at your convenience. The ability to access funds for urgent needs is also a key attraction for many,” she said.
Olumide Oyetan, chief executive StanbicIBTC Pension Managers, said PenCom recently introduced two key frameworks – the Personal Pension Plan and the Foreign Currency Pension Contributions – both aimed at deepening inclusion, increase flexibility, and making retirement planning more accessible to every Nigerian.
“These reforms recognise that today’s workforce is diverse and dynamic. Many Nigerians now work independently, while others earn in foreign currency, either at home or abroad,” Oyetan noted.
“Through this new framework, every Nigerian, regardless of income source or profession, can participate in the pension system with confidence.”
Edidiong Akan, chief compliance officer, Stanbic IBTC Pension Managers, said the PPP is different as no employer is involved.
“You contribute whatever amount you can, whenever you can. Daily, weekly, monthly, it’s entirely your decision,” he noted.
“Another major difference is access. In the CPS, funds are locked until retirement, unless you are out of work and qualify to access 25 percent. But with the PPP, you can access 50 percent of your contributions whenever you need them, while the remaining half is preserved for retirement.”
Akan further said that another critical improvement in the new PPP framework is that individuals who left the CPS – those who had opened RSAs while employed but later became self-employed – can now continue contributing to their accounts.
“Previously, they couldn’t contribute unless their employer remitted on their behalf. That restriction has now been removed.
“Even those with employers can now make additional voluntary contributions, which are treated under the PPP structure. Your employer may remit the statutory portion, but you can choose to top it up, and those additional contributions will follow PPP rules.”
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According to her, this expansion opens the pension system to many more Nigerians.
“In the past, people would say, ‘I want to contribute, but I’m not formally employed.’ Now, they can easily do so and independently.”
According to the guidelines, all existing voluntary contributions under the CPS are deemed to form part of the PPP.
Meanwhile, to encourage participation in the PPP, the guidelines include several incentives. These include arrangements through licensed insurers and Health Maintenance Organisations (HMOs) for group policies that offer basic health insurance, personal accident cover, burial or life insurance, and other commission-approved micro-insurance products aimed at strengthening social protection for PPP contributors.
The guidelines also provide room for partnerships with licensed financial institutions to offer financial products and services that improve contributors’ welfare such as access to microcredit, savings schemes, and insurance-linked services.
Source: Businessday.ng | Read the Full Story…
