The Director-General of the Nigeria Employers’ Consultative Association, Mr. Adewale Oyerinde, has said that an inclusive pension scheme is vital for broader retirement security in Nigeria’s informal sector, which constitutes a significant portion of the nation’s workforce.
Oyerinde noted that Nigeria’s pension system is undergoing significant reforms to extend coverage to informal sector workers. The informal sector has long been excluded from the contributory pension scheme due to its unique dynamics.
Speaking with The PUNCH in an exclusive interview, Oyerinde stated that addressing this gap is crucial for ensuring financial stability for millions of Nigerians in their later years.
The NECA boss emphasised the importance of this reform, stating, “Expanding the pension scheme to the informal sector is not just a necessity; it is a step toward creating a more inclusive and equitable financial system for all Nigerians.”
“Under the leadership of the National Pension Commission, collaborative efforts with private-sector partners like NECA are driving these reforms. Employers, particularly those in the formal sector, have played a critical role in the success of the contributory pension scheme by ensuring employee enrolment and compliance. However, stakeholders recognise that the informal sector requires a different, tailored approach,” he said.
Oyerinde mentioned that, unlike formal workers, many in the informal sector operate without structured employment systems, making direct employer contributions challenging.
Consequently, PENCOM is working on innovative solutions such as micro-pension plans, which allow individuals to contribute flexibly based on their income patterns. This approach is expected to resonate with market traders, artisans, and other informal workers, encouraging voluntary participation.
“Effective communication is key. We must educate the informal workforce on the benefits of joining the pension scheme and provide them with the tools to contribute conveniently. When they understand the opportunities this offers, more will participate,” he added.
He added that PENCOM’s commitment to inclusivity with stakeholders through engagement strategies, such as sensitization campaigns and partnerships with trade associations aims to break down barriers, including lack of trust and awareness, which have historically hindered informal sector participation.
“As the reforms progress, the private sector’s support remains pivotal. By combining public policies with private-sector innovation, Nigeria’s pension system is poised to achieve its goal of broader coverage and long-term sustainability,” he mentioned.
Meanwhile, Oyerinde noted that the expansion of the scheme to the informal sector represents a significant milestone in Nigeria’s journey toward financial inclusion and security for all its citizens. For millions of informal workers, the promise of a dignified retirement may soon become a reality.
Also, the Director-General of the National Pension Commission, Omolola Oloworaran, had earlier revealed PENCOM’s plans to integrate over 60 million informal workers into the national pension scheme.
Oloworaran said, “By expanding pension coverage to this underserved sector, the initiative seeks to provide greater financial security and sustainable retirement options for workers in the informal economy to avert the pressing issue as millions risk retirement poverty.”
She stated that data from the National Bureau of Statistics revealed that the informal sector represented over 65 per cent of Nigeria’s workforce. Yet, only about 12 per cent of the working population has any form of retirement savings, leaving millions vulnerable to old-age poverty.
According to Oloworaran, the nation is undergoing some economic challenges, even from a global perspective, these challenges abound globally, although every country has its peculiar challenges.
“For us at PenCom, the contributory pension scheme has always been supporting workers because they are the bedrock of support that helps the contributory pension scheme,” she stated.
She mentioned that the micro pension plan was especially useful during tough economic times, as it allowed informal sector workers with savings to withdraw up to 40 per cent of their contributions as a contingent portion to address immediate financial needs.
