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Low coverage of CPS could worsen old age poverty

File: insurance

By Rosemary Onuoha

DESPITE the numerous poverty eradication programmes which past governments had initiated and implanted, a world bank’s report shows that Nigerian Human Development Index (HDI) is 0.416 and that above 70 percent of the population was living on the breadline.

Older people in developing countries are among the poorest in the world, with 100 million of them living on less than a dollar a day, 80 per cent with no regular income and with the proportion increasing. However, does the Contributory Pension Scheme, CPS, alleviate poverty in the lives of the elderly citizens in Nigeria? Is the monthly pension adequate to meet their needs?

While there is evidence to suggest that pension contributes to poverty reduction, this does not translate into poverty alleviation because of the coverage of the pension scheme. The number of registered contributors under the CPS is over 7.01 million, representing about 7.45 per cent of total labour force and 3.95 per cent of total population in Nigeria.

“This signifies the lack of coverage across many private and informal sectors of the Nigerian economy who are not covered by the pension scheme. The informal sector represents 70 per cent of Nigeria’s total working population. There is therefore the need to alleviate both old age and household poverty by extending the scheme to all sectors of the economy,” stated Mrs Idu Okwuosa of Stanbic IBTC Pension Managers.

Poverty is one of the most pervasive problems facing Nigerians today. Absolute poverty denotes a condition in which a person or group of persons   are unable to satisfy their most basic and elementary requirements of human survival in terms of good nutrition, clothing, shelter, health, energy, transport, education, amongst other things.

Okwuosa said, “As the poverty level keeps on rising in Nigeria, the social demand on government also keeps increasing. And yet, poverty alleviation remains the thrust of government reforms. It appears that poverty alleviation is the motivation for the pension’s reform of government. In the light of this, additional social programmes that address the welfare of the poor and poverty alleviation at large deserve serious attention.

Importance of pension

“The importance of pension provision will continue to grow as individuals begin to place less reliance on family to look after them in old age and begin to face the reality that they need to look after themselves by building a nest egg for the future.

The success of pension operators in Nigeria in alleviating poverty largely depends on the sincerity, collaboration and commitment of all stakeholders like government that sets out the regulatory framework, the regulator, financial institutions who manage and administer contributions, individuals who pay and employers who must also contribute for their employees.

“Pension schemes aim at ensuring that public or the private sector retirees receive their retirement benefits as at and when due and assisting improvident individuals by ensuring that they save to cater for their livelihood during old age. Over a decade after the reform scheme became effective, there is evidence to show that the scheme is leading the country in the desired direction of poverty alleviation and self-sufficiency for the elderly,” Okwuosa stated.

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