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PenCom Re-evaluates Investment Regulation, Introduces Four Funds

By on October 17, 2012


The National Pension Commission (PenCom) has re-evaluated its investment guideline to allow the introduction of different types of funds capable of affording improved yields, which is meant to improve the earnings on pension fund contributions.


After the re-evaluation, the commission has decided to set up four funds to substitute the Retirement Savings Account (RSA) Fund into which every contributor presently invests.

This was disclosed by PenCom Director General, Mr Muhammad Ahmad yesterday in Abuja, he said, the new fund is designed to give contributors more alternatives depending of their ages and include,

ü  the Retiring Fund

ü  the Conservative Fund

ü  the Ethical/Sharia Fund

ü  Aggressive Fund


Speaking during the fourth Conference for Directors of Pension Operators in Nigeria, Ahmad clarified, the Retiring Fund is designed for contributors who are 50 years and above, the Conservative Fund for contributors between 45 and 49 years, while the Aggressive Fund was for contributors below the age of 45.

Furthermore, the Ethical/Sharia Fund is for those who want their investments to be in Sharia complaint instruments, he said.

He further said, they are still working on the regulation, although it is in its final stage, “Hopefully before the end of October, we should be through with the regulation.”


“We are revising the investment regulation to introduce what you call multiple funds. Today if you are an RSA holder you have only one fund which is the Retirement Savings Account Fund managed by your PFA. However, we are going to introduce four funds. The first fund is the Aggressive Fund. If you are a very young person under the age of 45, you can be allowed to invest under that fund where there will be substantial increase in investment in floating instruments like equities.”


“The second Fund is the conservative fund – if you are above 45 you will join that fund and the third fund is the retiring fund if you are 50 years of age you will join that fund. However, we have not introduced the fourth fund, the Ethical Fund for those of us who want our investments to be in Sharia complaint instruments,” he said.


He however stressed the importance of accessibility of instruments for each of the funds, adding that that regulation was not the main thing. “The issue is not about regulation, the issue is those instruments available? If they are available, I tell you the PFAs will invest based on their individual assessment. They are not compelled to invest, they will invest because it is an investment decision they have to take on behalf of their clients.”


Ahmad expressed satisfaction with the progress PenCom has achieved so far during his tenure, he said the board has achieved what it set out to. Even though his tenure will expire in December, he would have no regrets.


“As a group, we set out to achieve three things. The first one was to establish an institution that would regulate and supervise the pension industry that is the National Pension Commission, the second one was to establish operators. In other words, we needed to licence Pension Fund Administrators and Custodians and today we have about 20 PFAs and four Custodians, and thirdly, to have an industry. Today we have a pension industry, which has about N2.8 trillion pension assets, almost $80 million, over 5.3 million Nigerians have registered, and over 180,000 private sector employers have joined the scheme. So we can say we have an industry today.”


He said after eight years of the implementation of the Scheme, that the industry is still not free from challenges, especially the distinctions between the old and the new schemes. Adding that, the effects from the latest public hearing on the administration of pension was because of lack of understanding.


He said, poor service delivery by Pension Operators as well as the rate of inflation is part of the challenges of the new scheme.


He concluded by saying this about improving service delivery, “It was because of that that we increased the share capital so that they can have sufficient resources to invest in their business development and to expand into other areas of the country so that they would be nearer to their clients.”