Micro Pension
It empowers self-employed individuals and small businesses with less than 3 employees to voluntarily save and build a secure future by accumulating funds over an extended period, providing a reliable income during retirement.
- Micro, Small and Medium Enterprises (MSME) with a steady flow of income
- Sole proprietors with more than 3 employees mostly family members and/or lowly paid artisans
- Employers with more than 15 employees are mandated to comply with PRA 2014 provisions
- Self-employed workers with relatively less stable flow of income
- Businesses with low start-up costs and sometimes short life-span
- Workers who are employed by other informal subgroups as well as the formal sector
- These workers are generally uneducated
- Very low- and unstable-income earners
Micro Pension Plan refers to an arrangement under the Contributory Pension Scheme (CPS) that allows the self-employed and persons working in organisations with less than three (3) employees to make financial contributions towards the provision of pension at their retirement or incapacitation.
A Micro Pension prospect must: (a) Be a Nigerian, not below 18 years of age; (b) Have a legitimate source of income; (c) Belongs to a trade/association/profession; and (d) May be self-employed or an employee of an organization with less than three employees with or without a formal employment contract.
An eligible Micro Pension contributor can enroll/register through any Pension Fund Administrator (PFA) of his/her choice, obtain and complete the Retirement Savings Account (RSA) Opening Form either physically or electronically. A unique Personal Identification Number (PIN) would be issued to the registered contributor.
Yes. The Pension Fund Custodian (PFC) has provided full guarantee of the total pension assets under its custody. Thus, any kobo lost will be refunded by the Custodian.
No. Subject to Regulations issued by the Commission, all interests, dividends, profits, investments and other income accrued to Micro Pension Fund and assets are not taxable.
No. Investment decisions for Micro pension are made by the Pension Fund Administrators in line with Investment Regulations issued by the National Pension Commission.
Contributions can be made daily, weekly, monthly or as may be convenient to the contributor and shall be subject to reporting requirements under the Money Laundering (Prohibition) Act.
There is no stipulated minimum amount of contribution under the Micro Pension Plan because it is dependent on the Contributor's pension aspiration and financial capacity. Thus, higher contributions will result in more money available for pension.
No. A Contributor cannot access an amount in excess of his/her Micro Pension Plan account balance because the Pension Reform Act 2014 prohibits such transaction.
Retirement Withdrawl: It is the withdrawal of that portion of the RSA balance that the Micro Pension Contributor shall be eligible to access as monthly pension upon retirement in accordance with the Regulation for the Administration of Retirement and Terminal Benefits.
Contingent Withdrawal: It is the withdrawal of that portion of the RSA balance (contributions plus returns on investment) made available for withdrawal to ease financial pressures or needs of the Micro Pension contributor before his/her retirement.
A Micro Pension Contributor shall be eligible to access the contingent portion of the balance of his/her RSA three (3) months after making the initial contribution. Subsequently, he/she can make withdrawals once in a week, from the balance of the contingent portion of the RSA.
The Pension Fund Administrator is mandated to approve and pay the amount requested from the contingent portion within 48 hours of application for withdrawal.
The Micro Pension Contributor who secures a formal employment shall notify his/her PFA for conversion into the mandatory pension. The Micro Pension contributor shall also retain his/her existing RSA to be used for the mandatory pension.
A Micro Pension Contributor shall retire upon attaining the age of 50 years or on health grounds. However, a Micro Pension Contributor can choose to extend his retirement age beyond 50 years.
A Micro Pension contributor shall, upon retirement, access his/her retirement benefits through either Programmed Withdrawal or Life Annuity.
The balance in a Micro Pension Contributor’s RSA shall, in the event of death, be paid to the legal heirs of the deceased/contributor as may be appointed by a Will or Letter of Administration granted by a Probate Registry or as may be directed by a court of competent jurisdiction in the State of residence of the deceased contributor, as the case may be.
No. Micro Pension Plan only allows for conversion from Micro Pension Plan to the Mandatory Contributory Pension.
