Nigeria’s Micro Pension Scheme Faces Slow Growth Amid Low Awareness and Economic Pressures
By SpringnewsNG Media Limited | July 29, 2025
Abuja, Nigeria – Nigeria’s micro pension scheme, designed to provide retirement security for informal sector workers, is struggling to attract contributors, as low public awareness, harsh economic conditions, and lack of trust in the system continue to weigh heavily on potential participants.
The Micro Pension Plan (MPP), introduced by the National Pension Commission (PenCom) in 2019 under the Contributory Pension Scheme (CPS), was aimed at extending retirement savings to self‑employed individuals and workers in the informal economy, which accounts for over 80% of Nigeria’s labor force.
Despite initial optimism, participation has remained low, raising concerns that millions of Nigerians in the informal sector remain unprotected in old age.
Economic Hardship Limits Contributions
Analysts say the current cost‑of‑living crisis, high inflation, and stagnant income levels are discouraging many from making voluntary micro pension contributions.
“When people are struggling to feed and pay basic bills, saving for retirement feels like a luxury,” said a Lagos‑based financial analyst, Bamidele Ogunsanya.
PenCom’s latest quarterly report shows that contributor enrollment under the MPP remains far below projections, with less than 100,000 active participants, despite the country’s over 40 million informal workers.
Low Awareness and Trust Deficit Persist
Experts also highlight poor awareness and skepticism about pension funds as major obstacles. Many market traders, artisans, and transport workers have never heard of the micro pension scheme or do not trust government‑regulated pension systems, given past cases of mismanagement.
Aisha Lawal, a tailor in Ibadan, said she would only join if “the government can guarantee my money is safe.”
PenCom Eyes Reforms to Boost Participation
To boost adoption, PenCom is intensifying sensitization campaigns, partnering with trade associations, microfinance institutions, and fintech platforms to simplify registration and encourage small, flexible contributions.
The commission also hinted at digital wallets for micro pension savings, allowing contributors to track and withdraw part of their funds for emergencies, a move expected to improve confidence and accessibility.
Experts Call for Incentives and Policy Support
Financial experts recommend tax incentives, government seed contributions, and partial subsidies to make the scheme more attractive. They warn that without urgent reforms, millions of Nigerians risk falling into extreme poverty at retirement age, further straining the social welfare system.
“Micro pensions are a lifeline for informal workers, but the scheme cannot succeed without aggressive awareness campaigns, technology integration, and economic incentives,” said Dr. Chika Onwuegbuchulam, a pension consultant in Abuja.
The success of Nigeria’s micro pension plan is seen as critical to expanding the nation’s pension coverage, achieving inclusive social protection, and reducing old‑age poverty in the decades ahead.
