Workers in the informal sector who are presently wooed by the National Pension Commission (PenCom) to embrace the Contributory Pension Scheme (CPS), have demanded for a window that would enable them get soft loans for the purchase of machines and equipment from their savings.
This demand was made when executives of PenCom meet the workers in Lagos. The workers also asked PenCom to clarify the minimum and maximum entry age for self-employed persons and informal sector workers under the CPS as well as how much and at what intervals they need to make contributions into the scheme.
They were also worried about the mode of payment of pension to them wondering “how can we access our pension when we retire,” adding “We don’t want to stand long hours on queues or suffer the fate of pensioners under the residual defined benefit schemes.”
They said they would not like their accumulated saving and interest thereon taxed and would appreciate it if government could incorporate health insurance and loans scheme into the programme as well as making it possible for part of their pension saving to be used to provide them machines and equipment among other things.
PenCom has maintained that embracing the scheme would enable self-employed people and workers in the informal sector have sufficient income at old age, and also help inculcate savings culture through highly protected and regulated investment. PenCom also believes the scheme would afford workers the opportunity to connect to other programmes of government while helping to finance infrastructure across the country.
“They could as well use the balance in their Retirement Savings Accounts (RSAs) as equity contribution for residential mortgages and support their businesses and benefit from other micro-credit schemes and special awareness programme affiliated to the scheme,” Head of Research and Corporate Strategy Department at PenCom, Dr. Farouk Aminu said.
He stated that additional benefits to self-employed persons and informal sector workers include the cover provided under the Pension Protection Fund (PPF), explaining that under this arrangement, Government would bridge shortfalls or financial losses from investment of their accumulated retirement savings and guarantee them minimum pension in retirement, irrespective of how much they are able to save before retiring.