Pension regulator targets 30% of Nigerians by 2024

Nigeria's Pension Regulator is on a mission to expand its coverage to 30% of the country's working population by 2024. This ambitious target has set the stage for a potential transformation in the micro pensions industry. In a recent interview with CNBC Africa, Niyi Falade, CEO of Crusader Sterling Pensions, shed light on the role of the micro pensions sector in achieving this strategic objective. Falade emphasized the focus of the micro pension initiative on targeting the informal sector, which includes self-employed individuals and employers with fewer than three workers. This move is a significant departure from the traditional pension scheme, which primarily caters to larger employers. By expanding the coverage to a broader base of the population, the micro pensions industry aims to increase the number of registered workers from the current 7 million to an estimated 40 to 50 million in Nigeria. The potential for growth and penetration in the pension industry is substantial, with Falade likening the upcoming shift to a game changer that could surpass previous milestones. He highlighted the untapped market represented by the informal sector, which constitutes a significant portion of Nigeria's working population. By leveraging successful models from countries like India, Kenya, and Ghana, the micro pension industry is poised to introduce flexible regulations and incentives to attract a wider range of participants. One of the key features of the micro pension scheme is its adaptability to the irregular income patterns of self-employed individuals. Unlike traditional pension plans that have strict withdrawal guidelines, the micro pension framework offers greater flexibility in accessing funds for various purposes, including healthcare. This strategic approach aims to address the challenge of savings among individuals who rely on capital recycling for their businesses. While the concept of micro pensions holds great promise, effective sensitization and education are crucial for widespread adoption. Falade noted that robust awareness campaigns are underway with a focus on engaging industry associations to reach a broader audience. Collaboration with key stakeholders and the development of clear guidelines by the National Pension Commission are expected to drive the successful implementation of the micro pension initiative. As the chairman of the industry committee on micro pensions, Falade envisions existing players in the pension industry adapting their models to accommodate the new micro pension framework. Rather than the emergence of entirely new companies, he anticipates established players creating specialized units to cater to the micro pension market. This transition marks a pivotal moment for the industry as it shifts towards a more inclusive and accessible pension system. Looking ahead, Falade expressed optimism about the transformative impact of micro pensions and the potential for innovative investment opportunities in the sector. With a focus on appealing to a broader demographic and redefining the perception of pensions beyond retirement age, the micro pension industry in Nigeria is poised for significant growth and development in the coming years.