Monday, July 4, 2022
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Pencom, PenOp plan free health insurance for contributors

The National Pension Commission and the Pension Operators Association of Nigeria are planning to provide free health insurance for contributors of the micropension scheme.

They concluded on the plan after a meeting on ways to woo artisans into the Contributory Pension scheme.

Confirming this development, the Managing Director, Access Pension Fund Custodian Limited, Mrs Idu Okwuosa- Okeahialam, said the move was meant to drive inclusion in the scheme.

“The  pension operators had a meeting and had resolved to enrol contributors of the micropension scheme with the Health Maintenance Organisations,” she said.

Only 73,600 informal sector workers have registered under the Contributory Pension Scheme as of the end of December 2021, according to figures obtained from PenCom.

The Pension Reform Act, which came into effect in 2004, provides a contributory arrangement in which both the employer and employee contribute into the workers’ RSAs.

However, the CPS was only 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 PFAs were instructed to ensure the development of the micro pension plan to enable  artisans and other self-employed workers to plan for their financial future.

According to the MMP, the informal sector contributors will be allowed to withdraw at least 40 per cent of the contributions in their RSAs before retirement.

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.

However, to start withdrawing the 40 per cent contribution, the artisan must have contributed to his RSA for a minimum of three months.

PenCom stated, “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.”

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