The Informal Sector to Benefit From The Contributory Pension Scheme


Tuesday, April 02, 2019 / 02:00PM/ Deliotte


In a bid to strengthen the post-retirement financial capability of all working Nigerians (across all sectors of the economy), the National Pension Commission (PenCom) has finalised plans to launch the micro pension plan (MPP) on Thursday, 28 March 2019.


The MPP will allow employees of organizations with less than three staff as well as self-employed individuals to participate in the contributory pension scheme. The move to expand the scope of coverage of the contributory pension scheme will potentially mean more people will have their retirement catered for, as the informal sector of the economy accounts for about 88% of workers without pension, according to PenCom.


The MPP will be open to Nigerian residents (including foreign nationals resident in Nigeria) who are 18 years and above and are:

  • Self-employed with a business registered as a company, partnership or enterprise, including persons belonging to trade, professional, cooperative or business associations; or
  • Operating in the informal sector and working with or without formal written employment contracts; or
  • Employees in organisations with 3 staff or less


Key features of the MPP


·      Micro pension contributors (MPCs) will be required to register by completing a retirement savings account (RSA) form.

·         There will be flexibility around frequency of contribution – daily, weekly, monthly etc., as may be convenient for the MPC.

·      Contributions will be split in two – 40% contingent portion will be available for withdrawal before retirement, and 60% will be retained and managed exclusively for retirement benefits. The 60% will only be accessible by MPCs upon retirement and attaining the age of 50 years or on health grounds, in accordance with the Regulation for the Administration of Retirement and Terminal Benefits. MPCs will be able to access the contingent portion of their contribution, three months after making the initial contribution. However, withdrawal can only be made once a week.

·      An MPC may convert from MPP to mandatory pension contribution. However, conversion from mandatory contribution to MPP is not allowed.


This is a laudable initiative as we move away from an era when workers retire from the informal sector of the economy, with nothing to fall back on, after they have lived an active life.

 Proshare Nigeria Pvt. Ltd.

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