This is, however, different from what is obtainable with 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 had been urged to ensure the development of the micro pension plan, to enable the artisans and other self-employed to plan for their financial future.
However, to start withdrawing the 40 per cent contribution, the artisan must have contributed to his 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 the micro pension plan, including enforcement of compliance with the guidelines and customer complaint handling and resolution.
It also stated that it had issued a robust guideline on the micro pension plan, pursuant to the provision of Section 2(3) of the PRA 2014.