In 2013, HelpAge International, a London-based non-profit organisation at the forefront of advocating for old people’s welfare, published a ground-breaking report titled the Global AgeWatch Index. Developed from international data-sets drawn from the United Nations, World Bank, World Health Organisation and others, the Global AgeWatch Index ranked countries according to the social and economic wellbeing of old people in each country. In the report, countries where old people fared quite well – that is – countries where treatment of old people came closest to the ideal – occupied the top slots. Of the 91 countries surveyed, Nigeria ranked 85, beating only six other countries, last of which was, you guessed right, Afghanistan! Sweden, Norway and Germany took the first, second and third positions respectively, while the likes of Canada, USA and United Kingdom fell within the top 15.
It is difficult being a senior citizen in Nigeria, a country with zero social safety net for old people. Yet by 2056, every 25-year-old today would have clocked 65, the official retirement age in Nigeria. By that year, there would have been more than 215 million people in Africa aged 65 years. If you’re 25 or more this year, and if you beat the 53-years life expectancy in Nigeria, then by 2056, you’d have started being addressed as ‘Baba/Mama’ by outsiders and ‘Grandpa/Grandma’ by your children’s children.
To remember old age is to take note of the challenges that come with it. At sixty-five, you have a high chance of developing some chronic health condition, which will in turn shoot up health related bills. If you know any old person, then you may have heard them complain of one or a combination of these health issues: arthritis, rheumatism, diabetes, high blood pressure, glaucoma, cataract, osteoporosis and many more. The list is endless. At that point, you also need to maintain a decent standard of living, needing to pay special attention to your diets, eating more of fruits and vegetables to build resistance against illnesses and diseases. In some cases, consuming lots of fruits and vegetables reduces the necessity for medications over time. You also want to age with dignity, being able to afford all your needs and not convert your children to your breadwinners in their own complex world of a possible reduced disposable income.
As the need to increase expenditure rises, your capacity to earn decreases. In old age, you are either no longer working or you are just working little – as your strength can carry you – with its attendant reduction in income. You will be needing most money at a time you are only able to make the least of it. This means the only time to take care of that future is now, when you are still young, strong and less prone to ailments that will limit your capacity to earn.
But how many people think there’s a need to save for their old age? Not much. And we have statistics to prove this. By the end of March this year, only 7.01 million Nigerians have registered with the Nigerian Contributory Pensions Scheme, a social safety programme aimed at catering for the retirement needs of workers. The law establishing the pension scheme, called the Pensions Reform Act 2014, mandated employers in the formal sector to also make contributions for each of their employees, making available same percentage (or even more) as the worker, into the worker’s Retirement Savings Account. But so far, only 6.9% of the total labour force in Nigeria has enlisted to the scheme. In context, if you take a 2011 figure by the National Planning Commission, that 51.1m Nigerians were employed, then 7.01m of 51.1m is just about 14%. Getting a more recent employment data from the National Bureau of Statistics was difficult, but if I’d gotten, the number of employed Nigerians would reasonably have been higher than 51 million; in which case the 14% figure would have been less. In simple terms, only very few people save for their old age needs.
If those in the formal sector have not bothered about saving for their old age needs, then imagine what it is like in the informal sector, which constitutes 70% of Nigeria’s working population. Who is having a conversation about the bus driver’s needs, the barber, the vulcanizer, the mechanic, the electrician, the hairdresser, the tailor, and vast majority of players in the informal sector who have zilch knowledge of the contributory pension scheme? Worse still, they may not be able read this essay, either because they are not educated enough, or the educated ones among them have stopped reading since they no longer face exams, or because the essay may not even get to them.
If we imagine it – the reluctance of the informed young person to plan for his retirement needs and the ignorance of his fellows working in the informal sector – then the reality of old age poverty in Nigeria becomes inevitable. A vast majority of Nigerians will fall into old age poverty if we don’t change the course of things as they stand.
But it’s not entirely a hopeless situation. If you are in the formal sector, and you haven’t started making contributions towards your old age, then you should start today, now. Look for Pension Funds Administrators in Nigeria (actually, just a bit of a google search will give you the answer) and inform the HR and Accounts units of your organisation that you want them to start making monthly contributions to your Pension Savings Account. That also means the company (your employer) will start making their own contributions (which should be 10% of your salary, but not deducted from your salary. It’s simply an amount from your employer that is worth ten percent of your salary.)
Right now, only 26 out of the 36 states have adopted the Pension Scheme and are at various stages of implementation. And even in the states that adopted it, there are doubts that many of them still remit the contributions given Nigeria’s current economic quagmire. One would have expected the trade unions and the Nigerian Labour Congress to raise such questions and do well to put the erring state governments on their toes.
For those in the informal sector, PenCom has some good news. By the way, PenCom is National Pension Commission, the body that regulates pension operations in Nigeria. The regulatory body has concluded plans to roll out what it calls Micro Pensions, a long-term financial plan for the provision of pension coverage to organisations with less than 3 employees (the current pension law captured only organisations with 3 employees and above) as well as players in the informal sector. The features of the Micro Pension scheme include flexibility in contributions, such that the typical player can conveniently save for his old age. The micro pension scheme will also make it easy for participants to make withdrawals even before retirement age.
People may nurse some fear about their savings disappearing at the point where they’ll be needing them. This fear, while valid, has been taken care of by PenCom’s institutional controls that limit the capacity of Pension Fund Administrators to fritter away pension savings. By the end of March this year, the total value of pension savings was N5.46trillion. Interestingly, government and investors have been seeking to access the funds for investments. But the stringent guidelines set by PenCom has prevented access to the funds. The pension regulatory body insists on safety of funds first, before returns. This is good news, and should assuage the fears of the people who may be concerned about the safety of their savings.
Sometimes it’s good to mind our business. Other times, it becomes a show of empathy to mind other people’s businesses. If you’ve understood the benefits of the contributory pension scheme, then consider sharing it with your family and friends. And you may want to pay more attention to those you know who operate in the informal sector. Some of them make money that they spend on frivolities now, when they can easily enrol in the contributory pension scheme and save up for their future.
Tell everyone you know to be ready, because Micro Pensions will kick off soon. Remind them that it is a duty they owe themselves: to prepare with their own hands an old age that will be spent with sufficient monthly income, as well as dignity.
Chinedu Ekeke is on twitter as @Nedunaija