Pension plan expansion may widen inequality, expert warns
Lagos, April 2026 (TBL Africa) A pension expert, Mr Ivo Takor, has warned that extending Personal Pension Plans to students and infants could widen inequality if not properly structured.
Takor, Director of the Centre for Pension Rights Advocacy, made this known in an interview on Tuesday in Lagos.
He said the proposal, though well-intentioned, risked excluding low-income families already struggling with economic pressures and limited financial capacity.
According to him, current economic realities make long-term pension savings for children impractical for many Nigerian households across both urban and rural communities.
He noted that a large proportion of families depended on informal jobs characterised by unstable earnings and lack of predictable income streams.
Takor added that rising living costs, persistent inflation and weak purchasing power further strain household finances and reduce savings potential.
“In such circumstances, the priority for most families is immediate survival, not retirement planning decades ahead.
“Asking them to lock funds into a pension scheme for a child is out of touch with their realities,” he added.
He explained that the structure of such schemes often required consistent contributions, which many families were unable to sustain over long periods.
Takor noted the initiative could appear elitist, as only higher-income families with disposable income were likely to participate meaningfully.
He said this could enable wealthier households to build long-term financial assets early, thereby widening the socio-economic gap over time.
The expert stressed that families faced with competing demands would naturally prioritise urgent needs over distant financial goals.
“If a parent must choose between feeding the family, paying school fees or saving for a child’s retirement, the pension will always come last,” he said.
He maintained that such decisions were rational responses to economic hardship rather than a lack of financial discipline or awareness.
Takor also identified low public trust in long-term financial schemes as a significant barrier to widespread participation.
He cited past policy inconsistencies, inflationary pressures and previous financial system failures as factors undermining public confidence.
“Locking funds away for decades requires a level of trust that is not yet widespread among Nigerians,” he said.
He warned that without rebuilding trust, participation in extended pension schemes would remain limited and skewed toward privileged groups.
Takor, however, acknowledged that encouraging early savings culture among children and young people was a commendable policy objective.
He emphasised that such initiatives must be carefully adapted to reflect Nigeria’s socio-economic realities and income distribution patterns.
According to him, more inclusive alternatives would include flexible micro-savings arrangements that accommodate small and irregular contributions.
He said such models should allow easy access to funds during emergencies without strict withdrawal penalties that discourage participation.
Takor also advocated government-backed incentives to support low-income families willing to participate in structured savings programmes.
He suggested matching contributions for vulnerable households, particularly those with children enrolled in public schools across the country.
He further recommended integrating financial literacy programmes to help families understand savings options and long-term planning benefits.
Takor proposed that child-focused savings schemes should prioritise education and skills development rather than distant retirement objectives.
“For Nigeria, a more practical approach would be education savings plans, youth investment accounts or skills development funds,” he said.
He added that inclusive policy design would ensure broader participation and prevent the deepening of existing economic inequalities.
