One government organization that has been working very hard for its stakeholders and benefactors is the National Pension Commission (PenCom). In its bid to deepen pension fund and retirement savings in Nigeria, and “in furtherance of the implementation of the Multi-Fund Investment Structure,” the National Pension Commission has created a pension fund for everyone.
The most recent of those creations is Fund Six (VI).
Fund VI is a non-interest pension fund. With that, pension contributors and retirees now have many investment portfolio choices to select from. Indeed, there is now a pension fund for everyone.
Introducing Fund VI
The newly introduced Fund VI “complies with the provisions of Islamic Commercial Jurisprudence.” To make sure that the fund is suitable for Islamic retirees and pension contributors, PenCom sought for and obtained the approval of the Financial Regulation Advisory Council of Experts (FRACE), the Central Bank of Nigeria as well as the Securities and Exchange Commission.
As a requirement, pension fund managers are meant to create and maintain the non-interest fund, Fund IV, for those retirement savers interested in the fund as well as for interested retirees. To meet up with that requirement, pension fund managers now have fund VI separated into one for active savers and another for retirees.
Retirement savers in other funds like funds 1 through 3 and retirees in fund 4 who want Islamic compliant funds are free and eligible to move or switch to fund VI by making a formal request to their respective pension fund administrators (PFAs).
Self-discipline and the will to save
As it stands, there is little or no reason for Nigerians of all walks of life, age or investment risk characteristic not to participate in retirement savings. If you are younger than 49 years old, ready for risk-taking, fund II will be suitable for you. For those that are relatively old, (50 and above) and risk-averse, Fund III is for you and for those who are in self-employment, there is fund V (micro pension fund). For those already retired, there is fund IV. For those that are inclined towards Sharia-compliant savings, you’ve got fund VI.
The only thing standing between Nigerians and the ability to save towards their retirement is not lack of fund structure to register into but lack of the will to save arising from 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.
Lack of will and discipline is not the reason why many Nigerians shy away from pension fund savings but lack of trust for the system and government will power to keep that agency safe and corruption free. Worst of all, imagine the torment old people go through just to access their lifetime savings. They are often treated as if the money is a free gift from government and not their hard-earned sweat. It is very sad.
Nice article. However I don’t agree with some comments made. PSB are primarily for financial inclusion and they are expected to have 50% of the touch points in rural areas. They are actually a competitor to commercial banks. Yes, they deposit their excess fund with commercial bank. They do all ebusiness activities – cards, remittance etc. This is nothing but competitiion.
They compliment banks no doubt but they are a competition. They will eat into the market share of banks in those areas.