Micro Pension

What is Micro Pension?
Micro pension is an inclusive and flexible retirement savings plan for individuals in the informal sector.
It empowers self-employed individuals and small businesses with less than 3 employees to voluntarily save and build a secure future by accumulating funds over an extended period, providing a reliable income during retirement.
Under the Micro Pension Plan (MPP), individuals can make daily, weekly or monthly voluntary contributions.
The MPP is available for vendors, artisans, laborers, freelancers, consultants, small business owners, part-time workers, farmers, traders, associations or unions
It includes incentives like
- Flexibility saving
- 40% contingent withdrawal
- Multichannel platform for contributions and withdrawal
- 100% safe and protected savings
The Semi-formal Sector
  • Micro, Small and Medium Enterprises (MSME) with a steady flow of income
  • Sole proprietors with more than 3 employees mostly family members and/or lowly paid artisans
  • Employers with more than 15 employees are mandated to comply with PRA 2014 provisions
Organized Informal sector
  • Self-employed workers with relatively less stable flow of income
  • Businesses with low start-up costs and sometimes short life-span
Unorganized informal sector
  • Workers who are employed by other informal subgroups as well as the formal sector
  • These workers are generally uneducated
  • Very low- and unstable-income earners
Begin your Micro Pension plan today with any PFA of your choice
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Guidelines for Micro Pension Plan 2018
Section 2(3) of the Pension Reform Act, 2014 (PRA 2014) provides that employees of organizations with less than three employees as well as the self-employed persons shall be entitled to participate in the Contributory Pension Scheme in accordance with Guidelines issued by the Commission.
Micro Pension Circular on Fee Structure
Frequently Asked Questions
What is Micro Pension Plan?

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

Who can participate in the Micro Pension Plan?

A Micro Pension prospect must: (a) Be a Nigerian, not below 18 years of age; (b) Have a legitimate source of income; (c) Belongs to a trade/association/profession; and (d) May be self-employed or an employee of an organization with less than three employees with or without a formal employment contract.

How do I register/enroll for Micro Pension Plan?

An eligible Micro Pension contributor can enroll/register through any Pension Fund Administrator (PFA) of his/her choice, obtain and complete the Retirement Savings Account (RSA) Opening Form either physically or electronically. A unique Personal Identification Number (PIN) would be issued to the registered contributor.

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 Contributions under the Micro Pension Plan be subject to any taxes?

No. Subject to Regulations 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 for Micro pension are made by the Pension Fund Administrators in line with Investment Regulations issued by the National Pension Commission.

How are contributions made 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.

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.

Can a Contributor access an amount from his RSA in excess of his Micro Pension Plan Account balance and repay over a period?

No. A Contributor cannot access an amount in excess of his/her Micro Pension Plan account balance because the Pension Reform Act 2014 prohibits such transaction.

What is Retirement withdrawal and Contingent withdrawal?

Retirement Withdrawl: 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.

Contingent Withdrawal: It is the withdrawal of that portion of the RSA balance (contributions plus returns on investment) made available for withdrawal to ease financial pressures or needs of the Micro Pension contributor before his/her retirement.

For how long will an individual contribute before he/she can assess the contingent portion?

A 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 withdrawals once in a week, from the balance of the contingent portion of the RSA.

How long does it take to receive payment from my contingent contribution?

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

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 to be used for the mandatory pension.

What is the retirement age of Micro Pension Contributor?

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.

How do I access my contributions after retirement?

A Micro Pension contributor shall, upon retirement, access his/her retirement benefits through either Programmed Withdrawal or Life Annuity.

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 deceased contributor, as the case may be.

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.