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PenCom Introduces Non-Interest Fund For Pension Contributors, Issues Operational Framework

Ololade Omosan-Agie

The National Pension Commission has introduced a non-interest fund for contributors under the Contributory Pension Scheme.

The move is expected to take care of those who believe in ethical financial instruments under the provisions of Islamic Commercial Jurisprudence and any other established non-interest principles, as approved by the Financial Regulation Advisory Council of Experts.

A statement issued by PenCom on Wednesday also stated that the Commission has issued an operational framework for the fund.

The statement from the Commission stated further  that the Financial Regulation Advisory Council of Experts has certified that the operational framework issued by the Commission complies with non-interest (Shari’ah) finance principles.

It urged all Pension Fund Administrators (PFAs) to create and maintain the Non-Interest Fund (Fund VI) for interested Retirement Savings Account (RSA) holders.

The Commission stated that the Fund will be separated into two funds for Active RSA holders and Retirees respectively.

It said that 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 Non-Interest Fund, according to PenCom, offers a viable alternative to the conventional interest-based financial instruments for pension funds investment.

The statement reads in part. “The National Pension Commission (PenCom) hereby informs pension contributors and retirees that it has introduced a Non-Interest Fund (Fund VI) and 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 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.”

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