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Experts harp on need to deepen pension penetration

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By Cynthia Alo

Experts in the financial sector of the economy have harped on the need to deepen pension penetration in the country to include the millions of people in the informal sector as well the youthful segment of the country.

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Citing a United Nations report, the experts said that by 2050 about two billion of the world’s population will be over 60 years old, and 80 percent of them will be living in developing countries.

According to the experts, the World Bank in 1994 had said that ageing presents significant challenges for governments around the world and with an estimated 1.4 billion of the world’s population expected to be over 60years by 2030, primarily driven by developing countries, there is likely to be increased governmental spending on the provision of health care and other age-related requirements.

While citing a 2013 report, Executive Director at ARM Pension Managers, Mr. Abisola Onigbogi, said,  ‘With this expected growth in the number of people either retired or close to retirement, providing an adequate pension system in each country is becoming extremely important. It is even more pertinent due to rising government pension deficits, volatile economic conditions and rising life expectancies.’

Delivering a paper titled, ‘Driving the micro pension plan: Operators perspective, at a journalist workshop in Benin, he urged the government to leverage on the number of  mobile phone users in driving the micro pension in order to avoid the menace of old-age poverty.

He said: “We have about 172 million mobile subscription penetration which is 87 percent of the country’s population, The Nigerian adult population, 18 years and above is 99.6 million where 63.1million (63.3 percent) are based in rural areas,49.9million (50.1 percent) are women, 56.7million (56.9 percent) are 35years and younger, 20.2 million (20.4 percent) have no formal education,39.5 million (39.7 percent) have bank accounts, the average household size is 5.2 and the income earner per household is  1.6 percent.

“There are 17 million businesses in the country contributing 59.7 percent to the GDP, 70 percent, Labor Force, about 20 million belong to the semi-formal sector which is the Micro, Small and Medium Enterprises, while another 20 million are the organized informal sector comprising of the associations, cooperatives, and unions while the other 20 million are the  unorganized sector comprising of  the Unaffiliated individuals.”

He added that means of identification remains a major challenge to the implementation of the micro pension as about 60.1million people were unbanked as of 2018.

In his recommendation, Onigbogi explained that in driving pension system,  social media should be used to get to the younger population of  18 years. He said leveraging on the informal sector can increase pension penetration as the informal sector contribution to the GDP  is 57.9 percent.

“In driving micro pension, the system must be made convenient and tiered on-boarding, use of  digital/mobile-enabled transacting  for registration, contributions, collections, sensitization and awareness.

“Also, it should be integrated with other social benefits such as tax relief, health care, eligibility for credit, among others. Partnerships with existing brands familiar to the sector as well as a value-driven approach to the scheme will increase pension participation.”

He, however, charged pension operators to drive the sector by sensitization & awareness in conjunction with the National Pension Commission, According to him, account opening, maintenance, and customer service, investment performance and real returns, prompt, efficient and convenient payouts will encourage pension participation.

On her part, Chief Executive Officer, MoneyAfrica, Oluwatosin Olaseinde said that the social media should be used to extend pension to the younger population as financial information reaches the public faster and is easily disseminated through social media.

She said: “Businesses and individuals have through the advent of social media been able to get information at their fingertips, banks and government agencies also release their reports on their websites and it is seen that financial information is now accessible to everyone.

“The different social media platforms have aided the reach of financial information from continent to continent and this has helped everyone stay abreast with financial news and get financial information globally in real-time.”

Explaining the importance of leveraging social media to get to most of the Nigerian population, she said: “Nigeria had 24 million active social media users as at January 2019, with 23 million accessing social media  their  through mobile devices. That’s about 12 percent of the country’s population. “The average time spent on social media is about three  hours 17 minutes. 23 million monthly active Facebook users, six  million active Twitter users, 5.7  million active Instagram users while seven  million active YouTube users. Therefore, social media is key in the pension space as a huge proportion of PFA holders are within the active range of use of social media.

“You potentially have 3.8 million people in the formal space that are within the active age of social media. 803,895 are less than 30 years of age, 3.1 million are within the 30-39 years age bracket.

“You have another 2.3 million people, who may be partly active users of social media. 2.3 million of them fall within the 40-49 years age bracket. 83 percent of Nigerians online engage in social media while 78 percent own a cell phone or have internet access.”

Vanguard

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