PenCom, operators plan CPS migration to micro pensions

Stakeholders in the Nigerian pension industry are proposing guidelines that will revolutions the micro pensions plan, including opening up windows that will allow Contributory Pension Scheme (CPS) participants to migrate to micro pensions.

The National Pension Commission (PenCom) made the disclosure at the Micro Pension Plan Industry Stakeholders’ Engagement organised by the Commission and the Pension Fund Operators Association of Nigeria (PenOp) in Lagos.

Omolola Oloworaran, acting director-general, PenCom said while delivering her keynote address on the theme: ‘Reimagining Micro Pension’ that PenCom is considering market segmentation; rebranding; robust technology deployment and incentives as measures for transforming the Micro Pension Plan (MPP).

“In market segmentation, we are considering tailoring the MPP to address the unique needs of different informal sector groups, while for rebranding, we are looking at a new name and identity to resonate more with the target audience and drive engagement,” Oloworaran said.

Part of the rebranding measure reached at the event is also to allow retirement savings account holders to migrate from the contributory pension scheme to micro pension plan through voluntary savings.

Oloworaran highlighted that for robust technology, “we are considering partnering with Fintechs and telco companies to create a seamless, user-friendly platform for contributions and withdrawals to enable us scale, drawing inspiration from successful models in Kenya, Rwanda, South Africa, and Botswana, while for incentives we are exploring ways to provide tangible benefits, such as microloans or health insurance linkages, to incentivize participation”.

The acting DG explained that Nigeria’s informal sector is home to over 77.5 million hardworking citizens -traders, artisans, small-scale farmers, transport operators, and self-employed professionals, who form the backbone of our economy.

She disclosed that despite their significant contribution to the nation’s GDP, many of these individuals live without any form of financial safety net, leaving them vulnerable to economic shocks and hardships in their later years.

“The Micro Pension Plan is designed to change this narrative. By enabling informal workers to save in small, manageable amounts over time, the MPP offers them a chance to build a financial buffer for the future.

“With pension funds under management currently yielding an average return of 14 percent, the MPP is not just about savings, it is about creating wealth. It is about empowering millions of Nigerians to transition from economic vulnerability to financial security,” she added.

Christopher Bajowa, president of PenOp, who was represented by Donald Onuoha, head of Media Communication at PenOp said, as operators ‘We believe that there is large potential for the micro pension and the assignment is to see how this can be structured to make it work”.

Bajowa noted that if the industry is able to scale it up micro pensions, it will enable mobilisation of long-term funds for development of the larger economy.

Babatunde Alayande, head, Micro Pensions Department at PenCom in a paper entitled: ‘Overview of the Micro Pension Plan’ pointed out the possibility of converting from Mandatory CPS to MPP, noting that the outcome of the stakeholders engagement will drive development of a guideline towards adoption”.

Alayande also suggested continuous review of the Guidelines on MPP to take care of the dynamics in the operating environment, including to reduce documentation requirements for registration.

He harped on the need for segmentation of the MPP market to take care of different status of potential participants income, sector, and geography; rebrand and rename MPP to have greater appeal to the different segments of the market; as well as deployment of robust industry application that runs end to end across all operators and the commission.