The Micro Pension Plan
A plan for the informal sector traders, artisans, professionals and other self-employed people who do not qualify for the Contributory Pension Scheme
The Contributory Pension Scheme
A Plan for employees in the the Private Sector, Public Service of the Federation, Public Service of the Federal Capital Territory, States and Local Governments
Nigeria’s Pension Reform Act enacted in 2004 and subsequently repealed and re-enacted in 2014was necessitated by the myriad of problems that plagued the “pay-as-you-go” schemes in the public sector and the varying types of pension schemes that existed within the private sector, which resulted in retirees not getting their benefits.
The Pension Reform Act (PRA 2014), provide Nigerians with two variants of a fully funded pension scheme: The Contributory Pension Scheme (CPS) and The Micro Pension Plan (MPP).
The Contributory Pension Scheme (CPS) is a mandatory contributory pension scheme. It is obligatory for employees in the formal sector where the employer and the employee contribute towards the payment of the employee’s pension at retirement.
The Micro Pension Plan (MPP) is a voluntary pension scheme for individuals in the informal sector or MSMEs where the individual/contributor solely funds the payment of his/her pension at retirement.
CPS vs MPP
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CPS
MPP
Sector of Economy
CPS
Scheme is mandatory for all employees in the Public Service of the Federation, the Federal Capital Territory, the States, the Local Government as well as in the Private Sector
MPP
Scheme is mandatory for all employees in the Public Service of the Federation, the Federal Capital Territory, the States, the Local Government as well as in the Private Sector
Company Size
CPS
Persons working with organisation with > 3 members of staff
MPP
Persons working with organisation with < 3 employees or are conducting trade or business for self
Frequency of Contributions
CPS
Contributions are remitted monthly by the employer
MPP
Contributions are remitted periodically at the convenience of the participant
Funding Requirement
CPS
The employer and the employee contribute a minimum of 10% and 8% of the employee’s basic, housing & transport monthly allowances.
MPP
Employee/participant contributes as he/she desires; contributions are not defined
Other Funding
CPS
Additional voluntary contribution (AVC) is allowed and may be accessed before retirement
MPP
Contingent contribution is 40% of every contribution and may be accessed before retirement
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Contributory Pension Scheme - CPS
- Employees in the formal sector
- Organisations with more than 3 employees
- Public Service, FCT, States, LG & Private Sector
- One Recent Passport Photograph ‘4”4’ (With White Background)
- Letter of Employment or Letter of Appointment (in the case of employees of the Private Sector and Public Sector Self-Funded Agencies) 3. Letter of Fist Appointment or Attestation Letter (in case of employees of the Public Sector Treasury-Funded Agencies)
- A Passport Photograph against a white background
- Valid Means of Identification (Any of the following;)
- Transfer of Service (Where Applicable)
- Staff Identity Card
- Permanent Voter’s card
- Public Service, FCT, States, LG & Private Sector
- National Driver’s License
- International Passport
Contributory Pension Scheme - CPS
- Employees in the formal sector
- Organisations with more than 3 employees
- Public Service, FCT, States, LG & Private Sector
- Employees in the formal sector
- Organisations with more than 3 employees
- Public Service, FCT, States, LG & Private Sector
- Employees in the formal sector
- Organisations with more than 3 employees
- Public Service, FCT, States, LG & Private Sector
The Contributory Pension Scheme (CPS) was established in June 2004 by the Pensions Reform Act 2004 (as amended). It is an arrangement where both the employer and the employee contribute towards the payment of the employee’s pension at retirement.
It is a fully funded contributory scheme from an employee’s monthly emoluments who belongs to an organisation with employees of three and more employees.
Frequently Asked Questions
Who Receives the Monthly Pension Contributions Remitted by the Employer on Behalf of Employees?
Pension contributions are paid directly to the PFC by the employer to be held on the order of the PFA. The PFC notifies the PFA immediately upon receipt of the contributions.
Can an Employer Contribute More than the Stipulated 10% Minimum Pension Contribution?
An employer may agree on payment of additional benefits to the employee upon retirement or elect to bear the full responsibility of the scheme provided the total amount contributed by the employer should not be less than 18% of the employee’s monthly emoluments.
Can an Employee Make Voluntary Contribution into his/her RSA?
Yes, the scheme allows employees to, in addition to the 18% employee and employer contributions make voluntary contributions into their RSAs.
Please follow the link below for more FAQs about the contributory pension scheme;
Micro Pension Plan - MPP
- Be a Nigerian, not below 18 years of age;
- Have a legitimate source of income;
- Belongs to trade/association/profession; and
- May be self-employed or an employee of an organization with less than three employees with or without a formal employment contract.
- A Completed RSA Registration Form
- A Passport Photograph against a white background
- Your Means of Identification (National Identification Management Commission (NIMC) Slip or Permanent voters’ card or international passport)
- Bank Verification Number (BVN)
- Evidence of membership of a registered association, union, or cooperative society
- Letter of Employment
- National Identification Management Commission (NIMC) Slip
- Permanent voters’ card
- International passport
Micro Pension Plan - MPP
- Self Employed
- MSME i.e. Organisations with less than 3 employees.
- Informal Sector
- Employees in the formal sector
- Organisations with more than 3 employees
- Public Service, FCT, States, LG & Private Sector
- Employees in the formal sector
- Organisations with more than 3 employees
- Public Service, FCT, States, LG & Private Sector
The Micro Pension Plan (MPP) was launched on in March 2019. It is designed to allow the self employed and persons working in organisations with less than three employees make financial contributions towards the provision of pensions at their retirement or incapacitation
It is a fully funded voluntary plan by a contributor who may be self employed or belongs to a trade/association/profession or an organisation with less than three employees.
Frequently Asked Questions
As an employee of a formal organization and owner of my own private business, can I operate the MPP and CPS concurrently?
No, you are either on the MPP or the CPS.
As a Micro Pension Contributor, how often can I remit contributions into my account?
No Limits. It may be daily, weekly, monthly or as may be convenient to them.
Can I withdraw my funds when in need?
Every contribution received is split into two portions: The Contingent portion (40%) and the Retirement Benefit portion (60%). The Contingent portion of the contribution can be accessed totally or partially, only after the initial remittance has stayed in the RSA for at least 3 months. Also, upon retirement and having attained the mandatory age of 50 years, you can access your retirement benefits in line with the Regulation for Administration of Retirement and Terminal benefits. This is also applicable to contributors that retired on medical grounds.
Can contributions into the MP fund be made in any currency?
No, you can only make contributions in Nigerian currency.
Can a contributor Under CPS make Micro pension payments into his/her RSA account?
No, but he can make VOLUNTARY contributions in his/her CPS which has nothing to do with Micro Pensions Scheme.
Can a contributor under CPS convert to MPS?
No, participants in mandatory contribution cannot convert to Micro Pension Plan.
Please follow the link below to learn more about the Micro pension scheme;
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