Posted: Wednesday 17th October 2012 at 6:36 am

Nigeria: Finally, PenCom Revises Investment Regulations

Director-General of the National Pension Commission (PenCom), Mr. Muhammad Ahmad, yesterday said he had concluded plans to review investment regulations to allow for investment of pension assets into different types of funds which are capable of providing better yields.

As a result, the commission has floated four funds to replace the Retirement Savings Account (RSA) Fund into which every contributor currently invests.

Speaking in Abuja at a conference for directors of pension funds, Ahmad said the new funds, which would give contributors more choices depending on their ages, include the Aggressive Fund, the Conservative Fund, the Retiring Fund and the Ethical/Sharia Fund.

According to him, the move was part of efforts to improve the earnings on pension fund contributions.

He explained that the Aggressive Fund was for contributors below the age of 45, while Conservative Fund was introduced for contributors between 45 and 49 years.

Also floated was the Retiring Fund which was for contributors who were 50 years and above.

He said: “We are revising the investment regulation to introduce what you call multiple funds. Today if you are a RSA holder you have only one fund which is the Retirement Savings Account Fund managed by your PFA.

“But 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.”

Continuing, he said: “The second fund is the conservative fund, and if you are above 45 you will join that fund and the third fund is the retiring fund; if you are 50 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 compliant instruments.”

According to the DG, the Ethical/Sharia Fund would be for those who want their investments to be in Sharia complaint instruments.

However, he said the regulation was not yet out, though the commission was in the process of finalising it.

“Hopefully before the end of October, we should be able to be through with the regulation,” he said.

He noted, however, that regulation was not the issue but availability of instruments for each of the funds.

He said: “The issue is not about regulation, the issue, is are those instruments available? If they are available, I tell you the PFAs will invest on the basis of 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, whose tenure as DG PenCom terminates in December, said the board has achieved what it set out to do.

“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 license 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, over 180,000 private sector employers have also joined the scheme. So we can say we have an industry today,” he told reporters.

He said despite the eighth year of the implementation of the Contributory Pension Scheme, it was yet fraught with many challenges, particularly the fallout from the recent public hearing on the administration of pension occasioned by lack of understanding of the difference between the old and the new schemes.

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