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Micro Pension is key to fight poverty among informal sector workers – Issa Aremu

By Victor Ahiuma-Young

RECENTLY, the National Pension Commission, PenCom, released a draft guideline for micro pension that will eventually see the self-employed workers key into the Contributory Pension Scheme, CPS. As PenCom awaits the inputs of stakeholders into the guidelines, a major stakeholder in the sector, and General Secretary of the National Union of Textile, Garment and Tailoring Workers of Nigeria, NUTGTWN, Comrade Issa Aremu, in this interview, among others, believes Micro Pension is key to fighting poverty among self-employed workers.

Comrade Isa Aremu

One of the key principles of trade unionism is solidarity and you cannot have a divisible scheme for certain category of workers. Whether you are formal, public or private sector, there should be no division. Workers live on their productivity which translate to wage. Every worker, whether formal or informal, needs the safety floor after retirement.

The Contributory Pension Scheme, CPS, in 2014 following the amendment of 2004 Act,   makes it mandatory   for every employee   to contribute eight per cent of his or her income while employer contributes 10 per cent of the income to a pool of fund managed by Pension Fund Administrators, PFAs. There are about 25 PFAs that are registered to manage and save this money for life-after-work. We have seen close to 15 years of this scheme that a pool of fund has been built up to about N7 trillion, covering about eight million workers. This N7 trillion is almost the size of the national budget this year which is the highest in our budget.

Defined contribution

Whatever you want to say about this compulsory pension scheme, it is working. Though we have some of our reservations because based on what they called defined contribution, not defined benefits. Defined benefits have been cancelled and replaced with what they call defined contribution. Meaning, what you put in is what you get. We think we should combine the two together considering the level of poverty of the working people within our environment.

But regardless of what you say, this scheme has eliminated the problem of non-payment of pensions. Those who contributed under the scheme are being paid as at when due. Again, you can debate, how much they are being paid. Equally, we have reservations on that. Some of them are being paid N5,000, N10,000 or N15,000 per month under the CPS. We believe this is too low.

But they are being paid as at when due compared to the discredited old defined benefits which was not funded and being looted by the pension criminals. You know their names. They looted trillions of naira. So, we can say the CPS has worked. Even the pension is low, that is why NLC is arguing that we must also have minimum pension. Not just minimum pay for the workers, there must be minimum pay for the pensioners, which means, no pensioner should earn less than the prevailing minimum wage.

What we are saying is that CPS is working and we can improve on it. But it will not be moving forward if it does not cover the majority of the workforce who are in the informal sector. They are more than three quarter of the total workforce.   We must have a scheme to cover them.

It is commendable that PenCom has amended the Act to extend coverage to informal and self-employed workers including our members, tailors. They include mechanics, traders, hairdressers and so on. The principle says that any self-employed that has a minimum of three workers is covered by the scheme. Normally, tailors have their apprentices under them.

For us, it is commendable because it is the key to eradicating poverty among the self-employed people and it is also to guarantee quality life for them after work. We commend PenCom for that and they are talking about 30 percent coverage. We believe that is not ambitious enough. We believe PenCom should be more ambitious. Why talking about 30 per cent in 2020? They can say this year or next year. It is doable. All they need to do is to be more aggressive.

PenCom Board

President Muhammadu Buhari has to quickly as a matter of urgency, give priority to the proper constitution of the board of PenCom. It is completely unacceptable to working people, we the contributors to the scheme that a critical labour market institution, is board-less or without a board for almost two years. It is unacceptable. The former Director-General, Mrs Chinelo Anohu-Amazu was whimsically removed. That was bad enough, yet you appointed one that has not been confirmed by the Senate for whatever reasons. You now leave trillion naira pool of pension fund to be administered without a board.

What happened to corporate governance? The acting Director-General is doing well to manage the scheme. But what can she do when the board is not in place?

If the board has been in place, there would have been more aggressiveness in terms of sensitisation to promote micro pension scheme; even to expand the coverage of CPS in the formal sector because the coverage of the formal sector is also low and limited. There is deductions, no remittance and sanctions have not been applied in spite of the sanction clauses in the Act. It is only an active, well constituted board that can drive that agenda. That board include labour and employers. For us, it is one slow motion that is unacceptable and it has implications for the future of the scheme and pensioners.

Payment of pension

This micro pension scheme should have been launched much earlier with well constituted board. We have lost ground, almost two years. All the issues involved with the guidelines would have been discussed such as which technology to be used, what is the rate of contribution, how do you collect the money, where do you  put the fund? This is what the former Director-General had started before she was removed casually and they have refused to constitute the board. This is unacceptable to labour movement. It should be quickly addressed.

One of the key issues for labour movement in this coming election, is first, payment of minimum wage. There must be speedy completion of the negotiation. Any president, vice-president or governor that does not deliver minimum wage will not get workers’ votes. Another issue is life-after-work. Labour will also judge the president, vice-president and governors based on how they managed the pension scheme, particularly, the CPS.

So, President Buhari knows that he inherited a board that was well constituted. He did not have any excuse for dissolving a well constituted board and has refused to reconstitute it for whatever reason. What labour movement wants to know is who manages this fund of life after work which we are contributing?

Secure life after work

As good as this government has fought corruption, systemic corruption cannot be dealt with until you secure life after work for the working people. Some of the anxiety for cutting corners, both for senior and junior workers, is what happens to me after active work. Because life after work is not guaranteed, people engage in corruption. So, one key instrument to fighting corruption will be an enhanced, expanded pension scheme that covers all the workforce. Workers will then give their best for productivity and will shun corrupt practices because life after work is guaranteed.

If about seven to eight million workers can contribute about N7 trillion, imagine what 80 million workers can contribute. It means it is also key to the pool of fund to sustainable development which is now being denied because of less coverage.

President Buhari must lead this campaign. He cannot lead from the rear on the issue of pension scheme. President Olusegun Obasanjo did that which led to this scheme in 2004.   President Jonathan amended the Act further in 2014 which created the window for micro pension, commendably. President Buhari should deepen the scheme under this micro pension scheme. He should lead the campaign for the micro pension scheme because it is being done under him.

 

 

 


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