What is Micro Pension Plan?

Micro Pension Plan refers to an arrangement under Contributory Pension Scheme (CPS) that allows the self-employed and persons working in organizations with less than three (3) employees to make financial contributions towards the provision of pension at their retirement or incapacitation

Has Micro Pension Plan been successful in other countries?

Yes, it has been successful in countries like Kenya, Ghana and India.

Can one have more than one Retirement Saving Accounts?

No. A contributor can only have one Retirement Saving Account (RSA) in his/her lifetime. An individual already with a PIN and contributing under the mandatory pension arrangement cannot participate in the Micro Pension Plan.

All PINS generated under the mandatory pension arrangement before the official commencement of MPP cannot be used to make contribution into the Micro Pension Plan.

An eligible individual with the intention to partake in the Micro Pension Plan that has been captured under the mandatory pension arrangement should be recaptured again under the Micro Pension Plan.

Who can Participate in the Micro Pension Plan?

A Micro Pension prospect must:

  1. Be a Nigerian, not below 18 years of age
  2. Have a legitimate source of income
  3. Belongs to trade/ association/ profession.
  4. May be self-employed or an employee of an organization with less than three employees with or without formal employment contract.

Who will manage and keep custody of funds accumulated under the Micro Pension Plan?

The Pension Fund Administrator (PFA) manages and invests the funds accumulated under Micro Pension Plan on behalf of the contributor, while the Pension Fund Custodian (PFC) keeps the fund and assets in safe custody. UBA Custodian is our Custodian for the MPP funds.

Do contributions in the Micro Pension Retirement Savings Account generate income

Yes, PFA invest all pension contributions and all income from such investment activities are credited into the RSA of the contributor.

Is the Micro Pension Plan different from a savings account maintained with a commercial bank?

Yes, Micro Pension Plan is different from savings account maintained with a commercial bank because any savings made under the plan can only be withdrawn as monthly pension after retirement. On the other hand, savings made with the commercial Banks can be withdrawn anytime as the need arises.

What is the minimum amount of contribution accepted under the Micro Pension Plan?

There is no stipulated minimum amount of contribution under the Micro Pension Plan because it is dependent on the contributor’s pension aspiration and financial capacity. Thus, higher contributions will result in more money available for pension.

How often can one contribute under the Micro Pension Plan?

Contributions can be made daily, weekly, monthly or as may be convenient to the contributor and shall be subject to reporting requirements under the money laundering (prohibition) Act.

How do I access my RSA under the Micro Pension Plan?

A contributor can access the balance in his/her RSA through two means namely; Contingent withdrawal and Retirement benefit withdrawal.

What is Contingent withdrawal?

A portion of the RSA balance (40%) has been made available for withdrawal to ease financial pressure or needs of Micro Pension Contributors before his/her retirement. This portion (40% of contribution plus return on investment) is called the contingent portion and can be withdrawn 3 (three) months after first contribution and subsequently on weekly /monthly basis.

What is Retirement withdrawal?

It is the withdrawal of that portion of the RSA balance that the Micro Pension Contributor shall be eligible to access as monthly Pension upon retirement in accordance with the regulation for the Administration of retirement and terminal benefits.

How do I withdraw my contingent portion?

A Micro Pension Contributor can withdraw an amount from his/her contingent portion by applying to his/her Pension Fund Administrator (PFA) in a prescribed format.

The Micro Pension Contributor shall be eligible to access the contingent portion of the balance of his/her RSA three (3) months after making the initial contribution. Subsequently, he/she can make withdrawal once in a week, from the balance of the contingent portion of the RSA.

The Pension Fund Administrator is mandated to approve and pay the amount requested from the contingent portion within 48 hours of application for the withdrawal.

What is the retirement age of Micro Pension Contributor and how do I access my contribution after retirement?

A Micro Pension Contributor shall retire upon attaining the age of 50 years or on health grounds. However, a Micro Pension Contributor can choose to extend his retirement age beyond 50 years.

The retirement portion of the contribution shall be treated in line with retirement benefit administration and the MPC will access the retirement benefit through either Programmed Withdrawal of Life Annuity.

The balance in the contingent portion can be withdraw at the point of retirement or merged with the retirement portion depending on the choice of the Contributor.

What happens if the Micro Pension Contributor gets a formal employment?

The Micro Pension Contributor who secures a formal employment shall notify his/her PFA for conversion into the mandatory pension. The Micro Pension Contributor shall also retain his/her existing RSA (PIN) to be used for the mandatory pension.

The balance in the contingent portion of the contribution can be withdrawal at the point of conversion if desired by the contributor.

Can I participate in the Micro Pension Plan upon retirement from my job in the formal sector?

No, Micro Pension Plan only allows for conversion from Micro Pension Plan to the Mandatory Contributory Pension.

What happens to the balance in the Micro Pension Contributor’s RSA in the event of death?

The balance in a Micro Pension Contributor’s RSA shall, in the event of death, be paid to the legal heirs of the deceased/contributor as may be appointed by a Will or Letter of Administration granted by a Probate Registry or as may be directed by a court of competent jurisdiction in the State of residence of the deceases contributor, as the case may be.

Is there a provision for the guarantee of the safety of Plan assets under the Micro Pension Plan?

Yes, The Pension Fund Custodian (PFC) has provided full guarantee of the total pension assets under its custody. Thus, any kobo lost will be refunded by the custodian.

Would my contribution under the Micro Pension Plan be subject to any taxes?

No. Subject to the Regulation issued by the commission, all interests, dividends, profits, investments and other income accrued to Micro pension Fund and assets are not taxable.

Can I decide which financial instruments my contributions should be invested in?

No. investment decisions are made by the Pension Fund Administrators in line with Investment Regulations issued by National Pension Commission.

Can a contributor use his Micro Pension Plan Account as collateral for a loan?

No. Micro Pension Plan account cannot be used as collateral for loan.

How can I make contributions under the Micro Pension Plan?

Contribution under the Micro Pension Plan can be made by cash deposit or electronic transfer through any payment platform, or other financial service agents approved by Central Bank of Nigeria (CBN).

How is my fund distributed?

40% of every contribution goes to the contingent portion of the RSA while the remaining 60% goes to the retirement portion of the RSA.

On our statement of account, the contingent portion of the contribution is captured as Voluntary Contribution (VC).

How much can my PFA deduct from my fund?

PFAs can deduct administrative fees of N20.00 (Twenty Naira Only) on contributions less than N4,000 (Four thousand naira) and N80.00(Eighty Naira Only) on contributions of N4,000 and above on monthly basis.

What are the fees charged on the Micro Pension Fund (Fund V)?

The fees to be charged on Micro Pension Fund (Fund V) shall be based on monthly income earned and will be distributed as stated below:

 

FUND TYPE MAXIMUM RATES      
  PFA PFC PENCOM TOTAL
Micro Pension Fund (% of monthly earned income). 5.00% (flat) 1.5% (flat) 1.00% (flat) 7.5% (flat)

 

The income-based fees shall be accrued daily and charged at the end of the month following approval from the commission (PENCOM).

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