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Operators Attract Informal Sector Workers via Micro-pension Scheme

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pension funds - Investors King
  • Operators Attract Informal Sector Workers via Micro-pension Scheme

Micro pension plan targets the significant majority of Nigeria’s working population, who operate in the informal sector, according to the National Pension Commission.

Participants were expected from various informal sector workers’ groups including market women, members of the National Union of Road Transport Workers, members of textile, garment and tailoring associations, Keke Napep and okada riders associations, butchers associations, and workers in the movie and performing art industry.

Others include mechanics and other workers in the automotive industry.

The commission noted that micro pension was designed to fit the peculiarities of these informal sector groups.

After extensively engaging relevant stakeholders and obtained their inputs, the commission developed the product to suit their requirements.

The product was flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts.

Access to accumulated contributions was also flexible, seamless and facilitated by technology through varied payment system platforms.

Prior to its introduction, PenCom issued a guideline on micro Pension plan pursuant to the provision of Section 2(3) of the Pension Reform Act 2014.

The guideline spelt out detailed legal, institutional and operational frameworks for the administration of the product by licensed pension operators from the point of enrolment to the point of accessing benefits from the pension account by participants.

The licensed pension fund operators were given the guidelines, to put in place appropriate structure, infrastructure and trained manpower to ensure adequate coverage and the provision of excellent customer service to the micro pension plan participants.

With the introduction and subsequent successful implementation, the micro pension plan was expected to significantly expand pension coverage to greater number of Nigerians and further generate additional long term funds for Nigeria’s economic development.

The peculiarity of the micro pension plan was that the participants could withdraw 40 per cent of pension savings before retirement.

The informal sector contributors under the CPS would be allowed to withdraw at least 40 per cent of the contributions in their Retirement Savings Accounts before retirement, PenCom noted.

This was, however, different from what was obtainable in the formal sector in which contributors could only access 25 per cent of their RSA balance after four months of being out of paid employment or at retirement.

The Pension Reform Act, which was inaugurated in 2004, provided a contributory arrangement in which the employer and employee both contribute into the workers RSAs.

However, the CPS had only been opened to the formal sector since inception, until the Federal Government officially extended it to the informal sector in March 2019.

As part of the financial inclusion objectives of the government, the Pension Fund Administrators were urged to ensure the development of the micro pension plan, to enable the artisans and other self -employed persons to plan for their financial future.

However, to start withdrawing the 40 per cent contribution, the artisan must have contributed into his or her RSA for a minimum of three months.

The acting Director-General, PenCom, Mrs Aisha Dahir-Umar, said that the micro pension plan targeted the significant majority of Nigeria’s working population who, incidentally, operated in the informal sector.

She said, “Thus, a prospective micro pension contributor is required to open a Retirement Savings Account by completing a physical or electronic registration form with a Pension Funds Administrator of his/her choice. The contributors may make contributions daily, weekly, monthly or as may be convenient to them.

“Every contribution shall be split into two, comprising 40 per cent for contingent withdrawal and 60 per cent for retirement benefits. The contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto.

“The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion. The remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years.”

PenCom said it had established a separate department dedicated to the supervision of all matters relating to micro pension plan, including enforcement of compliance with the guidelines and handling of customer complaints and resolution.

Speaking on the micro pension, the acting director-general said, “The very successful launch by the President is an indication that the Federal Government is committed to ensuring that informal sector workers are also covered under the CPS. Effectively, we are just about two months into the implementation after the launch.

“Sequel to the launch, registration of contributors by the PFAs has commenced and is ongoing. Public enlightenment and engagement with relevant Unions and associations are also on going,” she added.

Dahir-Umar explained that to sustain the tempo and momentum achieved from the launch, the commission was planning to embark on sensitisation events in the six geo-political zones of the country.

While mentioning some of the efforts to ensure more people subscribe to the scheme, she said the informal sector had been segmented into three broad categories.

“The low income earners, the high income earners and the SMEs. Each of these categories is going to be targeted with appropriate MPP products and sensitisation programmes that meet their peculiarities,” she said.

She added that the commission was engaging relevant unions and associations in its enlightenment drive.

The total assets under Contributory Pension Scheme rose to N9.03tn as of the end of March 2019.

The funds, which had continued to record a steady rise, was N8.33tn at the end of August 2018.

Total workers under the scheme also rose to 8,569,037 in the period under review.

The Pension Reform Act, which introduced the CPS, was inaugurated in 2004, and provided a contributory arrangement in which the employers and employees contribute into the workers’ RSAs.

As part of the financial inclusion objectives of the government, the PFAs were urged to ensure the development of the micro pension plan, to enable the artisans and other self-employed to plan for their financial future.

The President, Pension Funds Operators Association of Nigeria, Mrs Aderonke Adedeji, said that the issue of the role of pension funds in economic development had attracted public attention, particularly with regard to Nigeria’s growing need for long term capital.

She explained that successful mobilisation of pension fund assets and its contributions to the economic growth of any nation were essential policy objectives.

Adedeji noted that the micro pension scheme was recently introduced by the Federal Government, and it allowed those in the informal sector to join the CPS.

Before the introduction of the micro pension, she said, the informal sector workers did not have the opportunity to have pension accounts.

The Head, Research & Corporate Strategy, PenCom, Dr Farouk Aminu, had, at a forum in Lagos, said the development could enhance the growth of pension assets in the country.

He stated that the micro-pension scheme planned to mobilise about 12 million contributors within five years.

On the benefits to be derived, Aminu noted that self-employed people and workers in the informal sector could reap by participating in the plan.

He explained that the initiative, in addition to providing income for people at old age and inculcating a savings culture through highly protected and regulated investment, would afford them the opportunity to connect to other programmes of the government while helping to finance infrastructure across the country.

Subscribers could, as well, use the balance in their RSAs as equity contribution for residential mortgages and support their businesses, he added.

According to him, additional benefits to self-employed persons and informal sector workers included the cover provided under the Pension Protection Fund.

He explained that under the arrangement, the government would bridge shortfalls or financial losses from the investment of their accumulated retirement savings and guarantee them minimum pension in retirement, irrespective of how much they were able to save before retiring.

He posited that the plan would be funded by an annual subvention of one per cent of the monthly wage of Federal Government employees, the annual levy on PenCom and pension operators as well as pension fund investment income.

The Head, Corporate Communications, PenCom, Mr Peter Aghahowa, said, the micro-pension initiative was made flexible for people to easily join, while the method of contribution would be decided by the contributors, who were to choose whether to contribute daily, weekly, monthly, quarterly or according to their plans.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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N1.3bn Fraud Allegation: Court Orders Arrest of Dana Air MD For Not Showing Up For Arraignment

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Mr. Hathiramani Ranesh

A Federal High Court in Abuja has ordered the arrest of the Managing Director of Dana Air, Mr. Hathiramani Ranesh for failing to appear in court for his arraignment in the alleged N1.3 billion fraud preferred against him by the Office of the Attorney-General of Federation (AGF).

The Federal Government had on October 10, 2024, asked the court to issue a bench warrant for the arrest of Dana Air after failing to honour invitation for his arraignment.

The AGF had filed a six-count charge against Ranesh and two others and marked Dana Group PLC and Dana Steel Ltd as the 2nd and 3rd defendants, respectively.

The prosecution argued that Ranesh and the two companies, along with others still at large, committed a felony between September and December 2018 at the DANA Steel Rolling Factory in Katsina.

They were accused of conspiring to remove, convert, and sell four units of industrial generators—three units Ht of 9,000 KVA and one unit of 1,000 KVA—valued at over N450 million. These assets were reportedly part of the Deed of Asset Debenture used as collateral for a bond, which remains valid.

The defendants and others at large were said to have conspired to fraudulently divert N864 million between April 7th and 8th, 2014, at House No. 116, Oshodi-Apapa Expressway, Isolo-Lagos.

This sum, reportedly part of the bond proceeds from Ecobank intended for revitalizing production at Dana Steel Rolling Factory in Katsina, was allegedly diverted for unauthorized purposes.

They were also accused of conspiring to transfer N60,300,000 to an Atlantic Shrimpers account (No: 0001633175) at Access Bank, fraudulently diverting funds earmarked as part of the Ecobank bond proceeds for resuming production at the Katsina factory.

The cumulative amount involved in the charge totals N1,374,300,000. Each offense is said to be contrary to and punishable under Section 516 of the Criminal Code Act, Laws of the Federation of Nigeria, 2004.

After Mojisola-Okeya Esho, counsel to the Federal Government, had requested for bench warrant to be issued against Ranesh, the defence lawyer, B. Ademola-Bello, disagreed with Esho, saying that they had filed a preliminary objection challenging the jurisdiction of the court to hear the matter and that the prosecution had already been served.

Delivering ruling on the application, Justice Obiora Egwuatu, agreed with Esho that Ranesh’s arrest was necessary due to his failure to appear in court despite being served with the charge and several proceedings having taken place.

Justice Egwuatu held that, according to Section 184 of the Administration of Criminal Justice Act (ACJA), 2015, the court has the authority to issue an arrest warrant against any defendant who fails to attend court sessions.

Egwuatu ordered that Ranesh must appear before the court on January 13, 2025, before any objections can be raised.

Consequently, he adjourned the matter till January 13, 2025, for hearing.

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Persistent Service Disruptions In Banks Paralyze Activities At Ports, Many Cargoes Trapped 

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Lekki Deep Seaport

Activities at the Apapa and Tin-Can Ports in Lagos State have been paralyzed as cargoes have remained uncleared following persistent disruption to some online services of some commercial banks in Nigeria.

It was gathered that the banks suffer network problems due to the upgrade of their electronic banking portals.

To this end, business moguls have been unable to pay the Customs duty necessary for the clearance of their cargoes at the ports.

A visit to the ports showed that many import units of containers have not been cleared because their clearance documents are still trapped in some banks due to ongoing network migration issues.

If the banking disruptions persist and cargoes continue to lie fallow at the ports, experts have said that prices of goods at Nigerian markets may soar.

Many persons who have been working at the ports have also been rendered jobless as activities at the ports remain in limbo.

Confirming the situation at the ports, the National President of the Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON), Mr. Frank Ogunojemite said many jobs are stuck because agents have been battling to settle payment part of their clearance schedules.

Ogunojemite revealed that the clearance of cargoes at the ports usually goes through Form M and the Pre Arrival Assessment Report (PAAR), said agents have to go through a commercial bank to pay their Customs duty before any clearance process can be done.

He said if the banking system or network is down, it will be impossible for Customs duty to be paid and that container will remain in the port accumulating rent which comes with storage and demurrage payments.

According to him, prices of goods may soar if the situation persists as cargo owners spend more for clearance if their containers spend longer time in the ports.

Preferring solutions, he called on government to introduce ‘compensatory law’ where importers are given waivers when delays to their cargoes inside the ports is not from them.

Also, haulage operators bemoaned the effect of the various banking migrations on picking of containers inside the ports.Persistent Service Disruptions In Banks Paralyze Activities At Ports, Many Cargoes Trapped

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Nigerian Businesses Face Tougher Times as PMI Drops to 19 Months Low of 46.9

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Business metrics - investors king

Nigerian businesses continued to face headwinds as the Purchasing Managers Index published by Stanbic IBTC shows a 19-month low. 

According to the report released on Friday, business conditions took a hit and PMI dipped from 49.8 points in September to 46.9 points, the steepest decline since March 2023.

For context, a PMI reading above 50 points indicates growth in business activity. Conversely, a reading below 50 points indicates contraction, suggesting deterioration consequent to an economic downturn.

According to the report, businesses faced pressures from the local currency weakening, higher fuel prices and increasing cost of transportation.

This has also forced the hands of businesses to increase prices to sustain operations, which the report stated has led to a reduction in new orders and business activity.

Most importantly, confidence in the business sector plummeted to the worst ever since the organisation started documenting PMI in 2014.

“Overall input costs rose at one of the sharpest rates on record, with selling prices increased accordingly. This resulted in marked reductions in new orders and business activity, while business sentiment was the lowest in the survey’s history,” the report read in part.

A positive light in the report was that some companies managed to add a few new hires, extending a six-month trend of job creation. The downside to this was that the companies employed these staff on a short-term basis.

The report also stated that companies are making efforts, now more than ever, to help their staff stay afloat in the current economic situation.

“Meanwhile, efforts to help workers with rising living costs meant that staff pay was increased to the greatest extent in seven months,” the report added.

Metrics like the private sector output, volume of orders, and quantities of purchases made by customers all recorded steeper values than they did in September.

Trends showed that prices, cost of staff maintenance and input prices, on the other hand, recorded very sharp increases, with some metrics posting record hikes since March 2023.

Inflation in the general Nigerian macro environment is telling in every quarter and businesses are not exempt.

Analysts told Investors King that special interventions will help ease the pressure on companies, but warned that risky conditions attached to these measures may scare off firms from accepting them.

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