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PenCom offers contributors, retirees investment options

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THE National Pension Commission (PenCom) has introduced a non-interest fund for contributors. 

PenCom said the launch is in furtherance of the implementation of the Multi-fund Investment portfolio choices to pension contributors and retirees.

The new fund will be for contributors who prefer investments in non-interest money and capital market products.

In a statement issued on Thursday and published on its website, the commission said the non-interest fund offers a viable alternative to the conventional interest-based financial instruments for pension funds investment.

PenCom said the non-interest fund, better known as fund VI, complies with the provisions of Islamic commercial jurisprudence and any other established non-interest principles.

The commission also said it had issued an operational framework for the fund.

“This is in furtherance of the implementation of the Multi-Fund Investment Structure, which seeks to provide investment portfolio choices to pension contributors and retirees,” the statement reads.

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According to the statement, the Financial Regulation Advisory Council of Experts (FRACE) has certified that the operational framework issued by the commission complies with non-interest (Shari’ah) finance principles.

PenCom further directed pension fund administrators (PFAs) to create and maintain the non-interest fund (Fund VI) for interested retirement savings account (RSA) holders.

It said that the non-interest fund would be separated into two funds for Active RSA holders and retirees, respectively.

“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,” the statement reads.

PenCom directed contributors to access more information on its website and PFAs.

The commission said the non-interest fund offers a viable alternative to the conventional interest-based financial instruments for pension funds investments.

Ene Ede, a social commentator and deputy director at ActionAid Nigeria, told THE ICIR that the development is good and would help the contributors benefit from the fund through such investments as they await their retirement.

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“This is something AIICO used to do for us when I worked with the USAID. It is surely a good development for the workers so they retire in good faith.”

An associate consultant to the British Department of International Development, DFID Celestine Okeke lauded the initiative but asked whether the contributors would be given the option of choosing specific debt instruments to invest on.

“It is a good initiative but still raises lots of questions on whether the contributors would be given an option to choose where to invest the funds on so that the government does not get cover to invest those funds in securities as it seeks a way out through constant borrowings.”

He suggested that the government should allow the contributors make choice about where to invest their funds as they await their retirement.

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