The National Pension Commission has introduced a non-interest fund (Fund VI) investment portfolio, and by this opening investment portfolio choices to pension contributors and retirees.
PenCom statement announcing the ‘introduction of a non-interest fund (Fund VI) and issuance of the operational framework’ put the contributors and retirees frame intact by providing investment portfolio driven by an operational framework.
PenCom comments, “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 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 operational framework issued by the Commission complies with non-interest (Shari’ah) finance principles.”
With the coast clear, PenCom has directed all Pension Fund Administrators (PFAs) to create and maintain the non-interest fund (Fund VI) for interested Retirement Savings Account (RSA)holders. PenCom clears, “The fund shall be separated into two funds for active RSA holders and retirees respectively.”
While directing the public to seek further explanation at its website, www.pencom.gov.ng, the regulator explains how request to switch to the portfolio is made and the alternative provided to those inclined. “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 regulation dealing with transfers between fund types within a PFA. The non-interest fund offers a viable alternative to the conventional interest-based financial instruments for pension funds investment.