Follow Us on Google
•Concerns mount as millions face old age without pension, insurance
By Adanna Nnamani and Henry Uche [email protected]
Alarm bells are tolling over Nigeria’s retirement system as millions of citizens approach old age without pension or insurance cover like annuity plans, life insurance, health coverage or structured long-term savings.
Economic and social security experts warn that the widening protection gap is pushing many into a future marked by poverty, insecurity and dependence. They maintain that weak coverage and low financial inclusion are recipes for deep social crises if urgent reforms are not implemented to expand access to pensions and strengthen the country’s social safety nets.
At the 2026 Inspenonline Retirement Summit held recently in Lagos, financial and insurance experts warned that millions of Nigerians risk entering old age without adequate retirement planning, leaving them vulnerable to poverty, rising healthcare costs and financial dependence. They noted that the growing protection gap could place an increasing burden on families and public support systems. To address the challenge, the experts called for improved financial literacy, deeper insurance penetration and more inclusive pension and long-term savings schemes to help workers achieve financial security beyond their active earning years.
In a paper presentation, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, who spoke on the theme, “Meeting Retirement Dreams of Informal Sector Workers in Nigeria: Unlocking the Next Frontier for Pension and Insurance Growth”, reminded the government across level that Nigeria’s informal sector represents the single largest untapped retirement protection market in the country’s financial system, but without plans for old age.
Yusuf explained that the informal sector is one with enormous economic significance, accounting for over 90 per cent of employment and contributing more than half of national output by several estimates. However, despite its scale and contribution to economic activity, the overwhelming majority of workers within the sector remain outside the formal pension and insurance ecosystem.
According to him, the disconnect presents a profound economic, social and commercial paradox. He noted: “Nigeria has one of Africa’s largest working populations, but millions of economically active citizens are approaching old age without pension security, annuity protection, life insurance, health coverage or structured long-term savings arrangements. Retirement for many informal workers still means continued labour into old age, dependence on children and relatives, liquidation of personal assets, or outright poverty”.
Painting a grim picture of the retirement landscape, the former LCCI boss cautioned that the ripple effects would extend across the pension and insurance value chain, impacting PFAs, insurers, microinsurance operators, insurtech firms and regulators alike.
“The informal sector is no longer merely a financial inclusion conversation; it is now the primary growth frontier for the pension and insurance industries in Nigeria. The future scale, relevance and sustainability of the pension and insurance sectors will depend substantially on their ability to penetrate the informal economy”, he noted.
Describing the informal sector as an under-served market space, he maintained that recent labour market statistics indicate that informal employment accounts for approximately 92–93 per cent of total employment in Nigeria, by implication, a vast majority of Nigeria’s labour force lacks access to structured retirement protection. This scale of exclusion is staggering.
“PenCom estimates suggest that more than 75 million informal sector workers remain outside the pension net. Insurance penetration is similarly weak, with a penetration ratio estimated at barely 0.3–0.5 percent of GDP, while only a very small proportion of adults possess any form of insurance cover. This situation has serious economic and social implications”.
For him, what should worry the federal and state government should be the vulnerability of Nigerians to old-age poverty, health emergencies, income disruption, disability shocks, funeral expenses, inflation-induced erosion of savings, among others.
As the burden of social protection continues to rest heavily on families, communities and informal support systems, ironically the same sector that appears financially excluded also possesses some of the strongest foundations for scalable pension and insurance expansion.
Despite the intense level of economic activities associated with the informal sector, the keynote speaker stressed that the challenge lies in the inability of formal financial institutions to design products and distribution systems that align with the realities of informal sector economics, therefore, something must be done quickly to avert impending doom.
On why the informal sector retirement security has remained weak, he said the product architecture has been fundamentally misaligned from the onset.
“Traditional pension and insurance models were largely designed around formal employment structures where workers earn stable monthly salaries and contributions can be deducted automatically through payroll systems.
“The informal sector operates very differently. Income streams are irregular, seasonal, volatile, transaction-driven, daily or weekly in nature. And since many artisans, traders and transport workers do not earn fixed monthly incomes, their cash flows fluctuate with market conditions, weather patterns, inflation, exchange rate pressures and seasonal demand cycles.
“Consequently, rigid contribution structures built around fixed monthly remittances are fundamentally unsuitable for a large proportion of informal workers. This structural mismatch has significantly constrained adoption”, he said.
Why many Nigerians are opting out of pension plans
Yusuf decried the dearth of trust as a major constraint and biggest barrier to pension and insurance penetration in Nigeria, as many informal workers remain skeptical about formal financial institutions.
Some of their fears manifest in: Weak claims experiences, failed investment schemes, delayed benefit payments, regulatory distrust, poor customer service, limited understanding of pension structures, historical failures of public institutions, among others.
“Insurance, in particular, continues to suffer from credibility challenges within low-income communities. Many still perceive insurance as an instrument that ‘collects premiums but resists claims’. Without strong trust architecture, large-scale penetration will remain difficult”, he stated.
Another major challenge towards securing old age is weak financial literacy and low retirement awareness.
Muda believes retirement planning culture within the informal sector remains weak because many workers focus understandably on immediate survival needs rather than ultimate long-term financial security.
“Macroeconomic conditions have reduced savings capacity; high inflation, currency depreciation, weak purchasing power and rising living costs have significantly constrained disposable incomes.
“Food inflation, transportation costs, energy prices and housing costs have all risen sharply in recent years, weakening the ability of low-income households to commit to long-term savings arrangements. This macroeconomic environment poses a serious challenge to pension mobilization within vulnerable income groups”, Muda said.
Other News
However, all hope is not lost as the foreseeable opportunities remain not only enormous but endless. He added, “despite these challenges, the informal sector still represents one of the most commercially attractive growth opportunities for pension and insurance firms in Nigeria. With demographic advantage, pension managers and insurers have enormous long-duration savings opportunities.
“We have savings mechanisms like the Esusu systems, Cooperative societies, rotational savings schemes, religious contribution structures, trade association levies, community thrift arrangements, etc. The real challenge is therefore not to create savings behaviour from scratch, but to formalize, digitize and institutionalize existing savings practices.
To the underwriters, he advised them to redefine their product design around informal economics, with the hope that, “Success in the informal sector will depend on flexibility, simplicity and behavioural alignment. So, products should permit: daily contributions, weekly micro-savings, seasonal deposits, event-based funding, irregular contribution cycles. Workers should be able to save N1000 daily, N5000 weekly, small digital wallet deductions, percentage-based transaction contributions, micro-contribution systems significantly reduce psychological entry barriers. Product documentation, onboarding procedures and claims processes must also become radically simpler, because complexity discourages inclusion”, he said.
To the government, he advised that pension and insurance products should be painstakingly embedded into existing economic ecosystems. According to him, the future of informal sector penetration lies in embedded finance. Therefore, pension and insurance firms should integrate products directly into: market associations, cooperative structures, agricultural value chains, ride-hailing platforms, POS agent networks, digital marketplaces, transport unions, and mobile money ecosystems. This approach lowers customer acquisition costs while leveraging pre-existing trust systems.
“For instance, transport workers can contribute through daily ticketing systems, farmers can make seasonal pension deposits after harvest cycles, traders can save automatically through digital sales platforms, cooperative members can embed pension deductions within thrift collections. The most successful firms will be those that integrate themselves invisibly into existing economic behaviour.
“Insurance and pension firms should therefore adopt hybrid models combining: retirement savings, Life insurance, accident cover, health support, funeral assistance, disability protection, emergency liquidity features. While immediate-value protection products can serve as powerful entry points into long-term retirement participation. This approach improves retention and strengthens customer confidence.
“We must build trust through aggressive claims efficiency. Trust is the currency of insurance penetration. Nothing destroys market confidence faster than delayed or disputed claims. Insurance firms must therefore treat claims settlement as a strategic growth instrument rather than a cost burden. The industry must aggressively improve: claims turnaround time, transparency, customer communication, documentation simplicity, dispute resolution systems. A positive claims experience within a market association or cooperative can trigger rapid word-of-mouth adoption across entire communities”, he added.
To achieve this goal, both sectors, he admonished, must leverage data analytics and digital intelligence. As data-driven engagement has become increasingly critical, firms should deploy analytics to: Understand behavioural patterns, predict contribution cycles, Design sector-specific products, improve customer segmentation, Detect early lapses, and improve retention. The informal sector should no longer be viewed as “unstructured.” It is increasingly data-generating through digital transactions.
“A ‘one-size-fits-all’ approach will fail. The risk profile differs significantly across sectors and economic activities: Product customization is therefore essential. So we must develop sector-specific products.
“Agricultural workers may require seasonal contribution structures linked to harvest cycles. Transport workers may need accident-focused protection. Traders may prioritize inventory and health-related risk coverage. Sector-based specialization will improve product relevance and adoption.
“Government policy must move beyond advocacy into active incentivization. Potential interventions include: Tax credits for micro pension participation, government co-contributions for low-income contributors, Matching savings incentives, pension contribution subsidies for vulnerable groups, regulatory support for digital onboarding, Simplified KYC requirements for micro products. Global experience shows that voluntary pension participation among low-income workers improves significantly when supported by targeted incentives”
He suggested a stronger national identity infrastructure, assuring that, the integration of: NIN, BVN, mobile wallets, digital addresses payment systems will significantly improve; boarding, contribution tracking, fraud reduction claims verification. “Digital identity infrastructure is now central to scalable pension and insurance inclusion”.
Need for a national retirement literacy campaign
Muda reiterated that Nigeria urgently requires a coordinated national retirement education programme. The campaign should involve: PenCom, NAICOM, PFAs, Insurance firms, Fintechs, trade associations, Religious institutions, National Orientation Agency, and media organizations, hence retirement security must become part of mainstream financial education.
“The challenge before pension and insurance operators is therefore not merely about product availability. It is fundamentally about: trust, distribution, behavioural alignment, affordability, flexibility, digital innovation and ecosystem integration.
“The firms that will dominate the next phase of industry growth will not necessarily be those with the largest capital base. They will be institutions capable of redesigning financial protection around the realities of informal sector economics.
“Ultimately, expanding pension and insurance inclusion within the informal economy is not merely a commercial opportunity. It is a social protection imperative, a poverty reduction strategy, a financial inclusion priority and a critical pillar for long-term economic resilience and inclusive national development” he added.
Meanwhile, the Chairman of STI Leasing Limited Mr. Tom Ogboi, applauded the organisers of the summit, calling for heightened sensitisation on how workers can enjoy life post-retirement. Sharing his personal experience, Ogboi disclosed that he retired as far back as 2002 and has been able to enjoy his retirement doing what he loves due to strategic planning. He emphasized that preparing for this phase of life must be intentional for every worker.
Addressing the gathering, the Media, Branding, and Communications Lead at the Pension Fund Operators Association of Nigeria (PenOp), Olajumoke Akinwunmi, stated that the pension industry has evolved significantly to ensure retirees receive their benefits as and when due.
She added that pension fund assets have grown consistently, yielding strong investment returns to deliver value to contributors. She highlighted the Personal Pension Plan (PPP) as a tool designed to bring flexibility to pension onboarding, particularly for players in the informal sector.
She disclosed that individuals from the age of 18 are eligible to onboard, noting that the plan offers numerous benefits aimed at supporting businesses and livelihoods both during working years and in retirement.
The Publisher of ‘Inspenonline’ and Convener of the Summit Mr. Chuks Okonta, explained that the initiative was established three years ago to bridge the critical knowledge gap clouding retirement matters in Nigeria.
“When you search online for localized information on retirement matters, you hardly find comprehensive data. There is a lack of serious advocacy locally, and as a media platform, we felt this is one of the ways we can deepen retirement education. We will continue this drive until every worker is fully enlightened,” Okonta said.
Also speaking at the event, the Commissioner for Insurance, Mr. Olusegun Omosehin urged workers to utilize the instrumentality of insurance products to secure a stable retirement.
Similarly, the Director-General of the National Pension Commission (PenCom), Ms. Omolola Oloworaran, represented by the Head of Corporate Communications at PenCom, Mr. Ibrahim Buwai, noted that the Commission has enhanced and revolutionised pension administration in Nigeria through its Pension Revolution 2.0 initiative.
He disclosed that the recently rebranded Micro Pension Plan (MPP) has been strategically repositioned to offer more robust, accessible, and secure long-term financial safety nets for self-employed Nigerians and informal sector workers.
In a unanimous voice, panelists believe that every Nigerian, regardless of their employment status, can retire with dignity and financial security, with informed plan and conscientious decision.
