Nigeria Case Study - How Incentives Can Boost Pensions For Informal Sector Workers

Overview

This case study examines Nigeria’s efforts to extend pension coverage in a labour market where around 93% of workers are employed informally. The core of the system is the Contributory Pension Scheme (CPS) introduced in 2004, which has successfully built pension assets for formal sector workers. To reach informal workers, Nigeria launched the Micro Pension Plan (MPP) in 2019, allowing self-employed and informal workers to open Retirement Savings Accounts with flexible contributions and partial liquidity. Despite this initiative, participation has remained extremely limited, with around 175,000 members—less than 0.5% of the informal workforce. Recent reforms have introduced the Personal Pension Plan (PPP) to modernise the scheme, improve digital access and allow features such as two-pot savings and third-party contributions.

Nigeria’s experience shows that flexibility and digital access are necessary but insufficient without operational matching incentives and stronger integration with social protection systems to expand pension coverage.