PenCom Introduces Non-interest Fund Structure

The National Pension Commission (PenCom) has announced that it has introduced a Non-Interest Fund (Fund VI) into it existing four different investment fund structures.

The Commission, also said it has already issued an Operational Framework for the Fund.

PenCom, which disclosed this in a recent circular to the general public said this was in furtherance of the implementation of the Multi-Fund Investment Structure, which sought to provide investment portfolio choices to pension contributors and retirees.

The commission said the Non-Interest fund is a fund that complies with the provisions of Islamic Commercial Jurisprudence and any other established non-interest principles, as approved by the Financial Regulation Advisory Council of Experts (FRACE) or any other body constituted by the Central Bank of Nigeria and the Securities and Exchange Commission, from time to time.

“The FRACE, has certified that the operational framework issued by the commission complies with non-interest (Shari’ah) finance principles.
”All Pension Fund Administrators (PFAs) are required to create and maintain the Non-Interest Fund (Fund VI) for interested Retirement Savings Account (RSA) holders. The Fund shall be separated into two funds for Active RSA holders and Retirees respectively, “the commission stated.

It said RSA holders in Fund I, II, III and retirees in Fund IV are eligible to move their RSA contributions to the Non-Interest Fund (Fund VI) by making a formal request to the PFA, in line with the provisions of the RSA Multi-fund Implementation Guidelines and Section 7.6 of the investment regulation dealing with transfers between fund types within a PFA.

According to the commission, the Non-Interest Fund offers a viable alternative to the conventional interest-based financial instruments for pension funds investment.
It said Further information on the Non-interest fund (Fund VI) can be obtained from the Commission’s website at: www.pencom.gov.ng as well as the various Pension Fund Administrators (PFAs).
PenCom had in 2018, introduced what it tagged RSA Multi-Fund Structure into its investment structure.
These include fund 1, fund 2, Fund 3 and fund 4 which is retirees fund.

The structure according to the commission involves the creation of multiple Retirement Savings Account, RSA Funds, with respective assets allocation, made to fit into the different demographic (age) profiles and risk appetites of registered contributors .

It said it would introduce fund five which it said would be non interest in its nature.

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