PFAs should improve payment method –EFInA
Out of 106.2 million adult population in the country, only 7.2 million have pension plans, a report by the Enhancing Financial Innovation and Access (EFInA) has revealed. This represents seven per cent of the country’s adults. EFInA, in its Access to Financial Services in Nigeria (A2F) 2020 Survey, disclosed, however, that 21 million adults who do not currently have a pension plan were making regular contributions for old age, while some 11.5 million adults are making daily and weekly savings suitable for micro pensions. While noting that increased uptake and usage of pensions is needed to achieve the National Financial Inclusion Strategy (NFIS) targets of 40 per cent NFIS targets and improve livelihoods for Nigerians, EFInA noted that the survey revealed that “19 million adults save at home or carry their savings with them.”
The report further revealed that 14 per cent of adults under the age of 55 had not made financial plans for old age, while only two per cent of adults under the age of 55 plan to primarily rely on pension in old age. “Just one-third of adults below 55years are very confident in their ability to meet long-term life goals,” it added. According to the report, 98 per cent (48.7m) of individuals working in the informal sector are without a pension as most receive income from their businesses and earn N35,000 and below per month. It added that 95 per cent receive their income in cash while four in five receive weekly income. Highlighting the reasons cited for not having a pension plan, EFInA said some of the respondents had a low understanding of available services, while many expressed a lack of confidence in “eventual” disbursement at retirement.
The organisation quoted one of the respondents as saying that “pension is for those that are highly paid, you do not expect me to be making N15,000 monthly from my business and still be doing pension…for what!? “How do I feed the family and do other things? There is no other pension apart from saving for the children since we are not working for the government. “We listen to the news and hear how retirees suffer and sometimes are unable to access their pension savings…not good at all…I like the idea of pension because I have seen people that collect their money and use it to start a good life after retiring from government work.”
It quoted another respondent as saying that “as a government worker, I wish I could stop this pension… most of us don’t like that our opinion are not sought, the government simply enforced it and the processes, when money is given in trickles, it can’t be useful towards achieving set goals/plans.” To bridge the gap, EFInA called for increased education of Nigerians on pension plans to motivate and deepen equity. It also urged Pension Fund Administrators to proffer timely and stress-free payment methods, while urging them to reconsider disbursement after retirement.