PenOp, PFAs differ on multi-fund operations’ framework

Some Pension Funds Administrators (PFAs) have claimed that the guideline for the newly introduced Multi-Fund Investment Structure (MFIS) by the National Pension Commission (PenCom) is yet to have an operational framework to guide activities.

The MFIS, which came through an amendment of regulations on the investment of pensions industry’s assets had no less than four PFAs, which websites categorically stated that the framework was yet ready.

Going by the development, there could be possible delays for the kick off of the scheme- assigning Retirement Savings Account (RSA) holders to different Fund types, in accordance to their risk tolerance.

But in an email response to The Guardian on the matter, the Executive Secretary, Pension Funds Operators Association of Nigeria (PenOp), Susan Oranye, described the claim as “incorrect.”

“This is an incorrect claim as PenCom has set out a detailed guideline on the Multi-fund structure procedures,” adding that PenOp has played a major role in seeing that state governments non-remittance of their monthly contributions into workers RSA’s is stopped.

She described the MFIS initiative as a laudable initiative that expands the investment opportunities for the industry and an indication of willingness by the regulator, not only to improve its service, but that it listens to the needs of the people.

“This gives contributors more input to the investment of their funds and this has been a concern raised for a while,” she said.

She explained that PenOp and PenCom are jointly working together to engage the state governments to not only pass their Contributory Pension Scheme (CPS) laws, but to implement and contribute for their employees.

Oranye maintained that the issue was an ongoing discussion that will take time due to various challenges, adding that the federal government’s non-remittance of employees and employers’ contributions as and when due, is equally on the fron burner.

The PenOp chief said that these violations by governments are happening even as the law says that the funds should be remitted not more than seven days, assuring that PenCom is engaging the government seriously.

However, efforts by The Guardian to get the response of PenCom on the PFAs’ claims, issues of remittances and efforts made by the commission to capture employees yet to be listed on the scheme was not successful.

When The Guardian paid a visit to the commission’s office in Lagos, a staff at the front office demanded an official letter to PenCom before they can speak concerning the issues.

On the new fund structure, unlike the former, the MFIS aims to align the age and risk profile of contributors by dividing the RSA fund into four distinct parts.

The RSA Fund was sub-divided into three separate Funds, while the RSA Retiree Fund became the fourth Fund. The respective Funds differ, based on their overall exposure to Variable Income Instruments (VII) and also the age profile of the members.

As promising as it looks, the new structure only allows RSA holders the right to select a particular Fund type, but gives the PFAs the full responsibility to choose the specific instruments that the funds will be invested into.

An active contributor of 49 years and below can opt for Fund I, while an active contributor in Fund III may elect to be assigned to Fund II.

However, an active contributor in Fund III is not allowed to opt for Fund I, while an active contributor in Fund II is not allowed to opt for Fund III.

To be assigned to any fund based on the preceding, an RSA holder must make a formal request to his or her PFA as it reduces the risk and uncertainty of contributors in line with their ages.