Carpenters, traders, tailors and players in the informal sector can access 25 per cent of their Micro Pension Fund (MPF) whenever they want while the 75 per cent can only be accessed when they attain the retirement age of 50 years and above.
The Guidelines for the Micro Pension Plan (MPP) released recently by the National Pension Commission (NPC) in readiness for the integration of the information sector into the Contributory Pension Scheme (CPS) provide that all micro pension contributions shall be split into two comprising 25 per cent for contingent withdrawal and 75 for retirement benefits.
The MMP is in line with Section 2(3) of the Pension Reform Act, 2014 (PRA 2014), which provides that employees of organizations with less than three employees as well as the self-employed persons shall be entitled to participate in the CPS in accordance with Guidelines issued by the Commission.
PenCom clarifies that the informal sector refers to employees in companies that are not mandated to implement the new pension scheme even as these categories of persons mainly in the informal sector constitute the vast majority of the working population in Nigeria and are not covered by any retirement benefit scheme.
The MPP is an arrangement for the provision of pension to the self-employed and persons operating in the informal sector.
The guidelines seen by Daily Trust provide that micro pension contributions shall be made by cash deposit, electronically or any payment instrument/platform approved by the Central Bank of Nigeria (CBN) and a maximum administration fee of N50 shall be charged on each RSA by the PFAs only in the months where the total contributions remitted into the RSA is above the sum of N4, 000.
Unlike in the formal sector where income is expectedly regular, the informal sector may be slightly deferent and the MPP expects that where the nature of engagement of the contributor is not continuous, contributions could be made intermittently.
When operational, Pension Fund Administrators are expected to manage the funds as two separate funds namely: Micro Pension Contingent Fund (MPCF) for the 25 per cent contingent contributions and Micro Pension Retirement Benefits Fund (MPRBF) for the 75 per cent retirement benefits contributions.
Contributors shall be eligible to access the portion of contribution available for withdrawal one month after making the initial contribution and subsequently, they will be eligible to make contingent withdrawals at any time.
“The Micro Pension Contributor may withdraw the total balance of the contingent portion of his/her RSA including all accrued investment income thereto. The timeframe for processing and payment of contingent withdrawals shall not exceed two working days,” the MPP guidelines stated.
For the sole purpose of retirement, the Micro Pension Contributor shall be eligible to access pensions upon attaining the age of 50 years or on health grounds in accordance with the Regulation for the Administration of Retirement and Terminal Benefits.
The guidelines provide that the Micro Pension retiree shall decide on the mode of accessing retirement benefits either through the Programmed Withdrawal or the Life Annuity.
