Stories by Rosemary Onuoha

NATIONAL Pension Commission, PenCom, said that it will commence implementation of the Retirement Savings Account, RSA, multi-fund investment structure from July 1, 2018.

Mr. Ibrahim Kangiwa of the Investment Supervision Department of PenCom disclosed this at the 2018 seminar for journalists in Uyo, Akwa Ibom state.

Kangiwa said the main objective of the RSA multi-fund investment structure is to resolve the challenge of asset-liability risk management experienced by pension funds. This would be achieved by: better aligning the risk and return expectations of contributors; better matching of pension assets and liabilities; as well as diversification of pension fund portfolios, as minimum limits are set for aggregate investments in variable income securities for each fund.

He said, “The multi-fund structure comprises four funds, which differ from one another based on overall exposure to variable income instruments. Fund One is for young contributors based on choice; Fund Two is for young and middle-aged contributors , ages 49 years and below; Fund Three is for pre-retirees, ages 50 years and above; while Fund Four is for retirees.

“The different funds’ portfolio mix are designed to fit the ages and risk profiles of contributors. All active contributors will default to Fund Two and Fund Three on this date. Contributors that wish to move to a different fund (within the allowable active choices) would be required to make a formal request by completing the necessary form to be provided by the Pension Fund Administrator, PFA.

“PFAs would be required to provide contributors with information on the benefits and risks of the various funds, prior to approving any change. The Commission and PFAs would embark on public enlightenment/sensitization campaign prior to commencement date. PFAs are currently carrying out the necessary in-house system upgrades and processes to ensure a robust IT system for the multi-fund. The introduction of the Multi-Fund investment structure for Retirement Savings Account, RSA, funds would address the varying risk appetite of contributors, as the different funds are tailored to fit the ages and risk profiles of contributors.

“Expanding the scope of allowable investment instruments and fund classes available to contributors would also improve returns on pension funds, as minimal limits have been set for variable income instruments which generally yield higher returns over a given period. The multi-fund structure would also benefit the economy as a whole, as pension assets would be channelled into key areas of the economy such as infrastructure and housing”.