PenCom deploys incentives to drive Micro Pension Plan as tool against old age poverty
The National Pension Commission (NPC) has deployed incentives and still in the works reviewing incentives for contributors and Pension Fund Administrators to get the traction required for contribution from Micro Pension Plan (MPP).
This was contained in a paper presented by the Head, Micro Pension Department, Dauda Ahmed, titled ‘The Micro Pension Plan: Bringing Financial Security at Old Age to the Doorsteps of the Informal Sector’ during this year’s Journalist Workshop in Lagos August 18, 2022.
Ahmed explained that in the league of incentives is the zero fee charge until funds under management reach a threshold of N5 million to encourage PFAs to jump into the competition train.
The cocktail of incentives spells out more, PFAs have a standing order not to charge fees once the Daily Value of Accounting Unit of the fund falls below N1.00 and PenCom clears that this would “ensure that principal contributors are not eroded.”
Also hinged is the Commission placing a regulatory restriction on itself, “The Commission shall not participate in Micro Pension Fund fee regime until FuM of a PFA attains the threshold of N4bn.”
Other rows of incentives in the fee structure for MPP stated by Ibrahim Kangiwa, Head, Investment Supervision, contained his paper, “What you Need to Know About the Investment of the Micro Pension Fund (Fund VI)” presented at the 2022 Journalists Workshop in Lagos
In the fee structure for MPP two broad types of allowable fees are chargeable to pension funds: administrative fees and asset/income based fees. Asset based fees are charged on the RSA “active” funds while income based fees are charged on the retiree funds.
The fee structure states that all statutory charges (taxes) and transaction costs shall be borne by the pension funds, while bank charges shall be borne by the PFC.
