Pension fund VI: there is now a pension fund for everyone

The National Pensions Commission (PenCom) is a government organization that has worked very hard for its stakeholders and benefactors. In its attempt to deepen the pension fund and retirement savings in Nigeria, and “as part of the implementation of the multi-fund investment structure”, the National Pensions Commission has created a pension fund for all.

The most recent of these creations is Fund Six (VI).

Fund VI is an interest-free pension fund. With this, contributors and retirees now have many choices of investment portfolios to choose from. Indeed, there is now a pension fund for everyone.

Presentation of Fund VI

The new Fund VI “is in accordance with the provisions of Islamic commercial jurisprudence.” To ensure that the fund is suitable for Islamic retirees and pension contributors, PenCom sought and obtained approval from the Financial Regulatory Experts Advisory Council (FRACE), the Central Bank of Nigeria as well as the Securities and Exchange Commission.

As a requirement, pension fund managers are expected to create and maintain the interest-free fund, Fund IV, for retirement savers interested in the fund as well as interested retirees. To meet this requirement, pension fund managers now have a separate VI fund into one for active savers and another for retirees.

Retirement savers in other funds like fund 1-3 and retirees in fund 4 who want Islamic compliant funds are free and eligible to switch or switch to fund VI by making a formal request to their trustees to respective pension funds (PFA).

Self-discipline and willingness to save

As things stand, there is little to no reason why Nigerians of all backgrounds, ages or investment risk characteristics should not participate in retirement savings. If you’re under 49 and willing to take some risk, Fund II is right for you. For those who are relatively old (50 and over) and risk averse, Fund III is for you and for those who are independent, there is Fund V (micro-pension fund). For those who are already retired, there is Fund IV. For those inclined towards Shariah-compliant savings, you have Fund VI.

The only thing that stands between Nigerians and the ability to save for retirement is not the lack of fund structure to enroll, but the lack of will to save resulting from a lack of self-discipline, because saving for retirement is not a luxury, it is a necessity that can only be achieved with and through self-discipline.

Dolores W. Simon