A pension expert, Mr. Ivo Takor, has warned that extending Personal Pension Plans to students and infants could widen socio-economic inequality if not carefully structured.
Takor, Director of the Centre for Pension Rights Advocacy, made this known in an interview with the News Agency of Nigeria (NAN) on Tuesday in Lagos.
He said the proposal, though well-intentioned, risks excluding low-income families already grappling with economic pressures and limited financial capacity—raising critical concerns for policymakers and HR stakeholders focused on inclusive financial security.
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 depend on informal employment characterised by unstable earnings and unpredictable 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 said.
He explained that the structure of such schemes often requires consistent contributions, which many families are unable to sustain over long periods.
Takor warned that the initiative could appear elitist, as only higher-income households with disposable income are likely to participate meaningfully, enabling them to build long-term financial assets early and widening the socio-economic gap over time.
He 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 reflect 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 participation, citing past policy inconsistencies, inflationary pressures, and previous financial system failures.
“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 towards more privileged groups.
However, Takor acknowledged that encouraging an early savings culture among children and young people is a commendable policy objective.
He emphasised that such initiatives must be 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, with provisions for emergency access to funds without punitive withdrawal penalties.
He also advocated government-backed incentives, including matching contributions for vulnerable households, particularly those with children enrolled in public schools.
Takor further recommended integrating financial literacy programmes to help families understand savings options and long-term planning benefits.
He 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.
