The traders, artisans, drivers and small business owners who keep Lagos running will reach old age with no pension. Nigeria's Micro Pension Plan was created for them in 2019, but only about 17,000 informal workers nationwide were actively contributing at the end of 2025. Pensions are regulated federally, but Lagos holds the levers that matter most for uptake. This proposal calls on the Lagos State House of Assembly to pass an Informal Workers Pension Inclusion Law that matches the first contributions of low-income savers, enrols workers through the associations and state services they already use, and protects their money from misuse.
The problem
At Fidelity Pension Managers, I watched older men and women come in to claim the benefits they now depend on to survive. It struck me that they were the fortunate few people who had spent years working for organisations inside the pension system. I thought of a relative who ran a retail cosmetics shop for over 12 years. Today, at her age, she is still struggling to make ends meet, because no retirement system was ever built for someone like her. Her story is the story of most working people in Lagos.
Statistics by Nairametrics point out that about 92% of employed Nigerians work in the informal and only around 11.2 million people held retirement savings accounts in March 2026, roughly 12% of the labour force. A report by BusinessDay states that PenCom's Director-General has described informal-sector pension coverage as about 0.25%, effectively zero.
Lagos feels this more than most states, because its economy runs on traders, artisans, transport workers and small business owners. Without a pension, these workers depend on their children in old age, keep working long after their health fails, or fall into poverty. As Nigeria's young population ages, this will become one of the state's largest social and fiscal pressures.
The Law
The Pension Reform Act 2014 created the Contributory Pension Scheme, which is compulsory for employers with three or more staff. Section 2(3) extends the scheme to the self-employed and informal workers, and on that basis PenCom launched the Micro Pension Plan in March 2019. The plan is well designed for irregular incomes:
• contributors choose how often to pay, whether daily, weekly or monthly
• 40% of savings can be withdrawn for emergencies, with 60% kept for retirement
• funds are managed by licensed pension fund administrators and held by separate custodians
Yet uptake has been very low. The barriers are well understood given that participation is voluntary, informal workers distrust financial institutions after years of failed savings schemes, there is little reward for the first naira saved, and signing up still feels distant from daily working life.
What Lagos can do
Lagos cannot change the Pension Reform Act or regulate pension administrators; those are federal matters for PenCom. But federal design is not what holds informal workers back. What holds them back is trust, convenience and the lack of an immediate reason to start, and on all three the state has real levers:
• Money. The state can fund incentives for its own residents to save.
• Reach. It licenses traders, transport operators and businesses, registers residents, runs markets and funds enterprise loans.
• Trust. It works daily with the market, transport and artisan associations that informal workers rely on.
The proposal uses these levers alongside the federal scheme, without duplicating it.
THE PROPOSAL: AN INFORMAL WORKERS PENSION INCLUSION LAW
1. Match the first contributions. For low-income Lagos residents who join the Micro Pension Plan, the state would add a matching contribution, for example 50 naira for every 100 saved, up to a yearly cap, for the first two years. This turns the first contribution from a sacrifice into a visible gain, which is what drives people to keep saving.
2. Enrol people where they already are. Every time an informal worker deals with the state, such as registering a business, renewing a trade or transport permit, applying for a Lagos State Employment Trust Fund loan or registering as a resident, they would be offered on-the-spot enrolment through a licensed pension agent. Joining would stay voluntary, but the offer would be automatic.
3. Work through associations. The state would sign partnerships with market, transport and artisan associations, training trusted members as pension champions and recognising associations that reach enrolment targets.
4. Protect contributors' money. All contributions must go directly from the worker's phone or bank to the pension administrator. No association, agent or official may collect or hold cash on a contributor's behalf, and doing so would be an offence. A simple complaints line would let contributors report problems.
5. Make public contracts set the example. Firms bidding for Lagos State contracts would have to show they are compliant with their own pension obligations, so the state does not reward employers who leave their staff without cover.
6. Partnership with PenCom and the industry. The state would work with PenCom, pension fund administrators and licensed pension agents on outreach, so the campaign speaks with one voice.
Implementation, research and measuring success
The law should start with a two-year pilot in a few large markets and motor parks, with a fixed budget for the matching contribution, before rolling out statewide. The match can be capped and time-limited to keep the cost predictable.
The pilot should be research-led. A partner organisation or research group would compare pilot and non-pilot areas and track:
• new enrolments and the share of accounts actively contributing after 6 and 12 months
• average contribution amounts and how often people pay
• the cost of the matching contribution per active contributor
• workers' trust in and understanding of the scheme, through short surveys
The House of Assembly would receive a yearly report and hold an oversight hearing before deciding on statewide rollout.
Objections to the Proposal
1. Pensions are a federal matter. Regulation is federal, and this proposal leaves it untouched. Lagos would act only through its own spending, licensing and partnerships, all of which are within state powers.
2. The state cannot afford to match contributions. The match is capped, time-limited and piloted on a fixed budget. It is also far cheaper than supporting a generation of destitute older residents later.
3. Informal workers earn too little to save. The Micro Pension Plan accepts small, irregular payments, and its emergency withdrawal option means savings are not locked away when a crisis hits. Many informal workers already save through contribution groups; this offers a safer, regulated home for that habit.
Conclusion
Nigeria built a pension system that works well for the minority in formal jobs. The majority, including the people who sell, build, drive and repair in Lagos every day, are still outside it. The federal framework already exists. What is missing is the push that turns a voluntary scheme into a habit, and Lagos is best placed to provide it. By matching first contributions, enrolling people where they already are and protecting their money, Lagos can show the rest of the country how to bring retirement security to the informal economy.
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