Due to increased financial difficulties, participants in the micro-pension program have started to take emergency withdrawals from their contributions.
The National Pension Commission developed the micro-pension plan, or MPP, to encourage low-income individuals, mostly those in the self-employed and informal sectors, to save for their retirement.
According to Financial Vanguard’s analysis of pension statistics, micro pension contributors’ dependent withdrawals in 2023 surged by 252.5% to N21.4 million from N6.2 million in 2022.
Furthermore, from 38 documented contingent withdrawals in 2022 to 64 in 2023, a 68.4% rise in contributors made such withdrawals.
The amount of the Retirement Savings Account (RSA) balance that is made available for withdrawal to relieve the micro pension contributor’s needs or financial strain before to retirement is known as a contingent withdrawal.
The low-income pension category shows underperformance, with target enrollments wholly outside the plan, coinciding with the sharp increase in contingency withdrawals.
Only 114,382 contributors were registered as of the end of 2023, despite the scheme—one of the Federal Government’s most strategically placed financial inclusion measures—being expected to enroll almost nine million registrants by that time. The National Pension Commission, PenCom, designed and administered the program.
Additionally, the data reveals that as of December 2023, the total pension contributions made to the micro pension were N680.2 million.
Because of this, some micro pension contributors are using the plan’s contingent withdrawal option to access their pension resources as the financial crunch gets deeper.
According to a quarterly breakdown of withdrawals for 2023, micro pension participants took out N2.98 million in the first quarter of that year.
In Q2’23, the figure climbed by 3.7% to N3.09 million, and in Q3’23, it increased by 238.5% to N10.46 million. However, in Q4’23, the figure decreased by 53.4% to N4.87 million.
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