The National Pensions Commission (PenCom) introduced an interest-free fund (Fund VI) and published an operational framework on it for contributors and retirees.
PenCom’s Head of Communications, Peter Aghahowa, made the disclosure in a statement made available to reporters Thursday in Lagos.
He said the initiative is part of the implementation of the multi-fund investment structure, which aims to offer investment portfolio choices to contributors and retirees.
“The Interest-Free Fund is a fund in accordance with the provisions of Islamic commercial jurisprudence and any other established principle without interest, as approved by the Expert Advisory Council on Financial Regulation (FRACE) or any other body established by the Central Bank of Nigeria and the Securities and Exchange Commission from time to time.
“The Frace has certified that the operational framework published by the Commission complies with the principles of interest-free financing (Shari’ah),” he said.
According to him, all pension fund administrators (PFAs) are required to create and maintain the interest-free fund for interested Retirement Savings Account (RSA) holders.
Mr Aghahowa said the fund would be split into two funds for active RSA holders and retirees respectively.
“Holders of the RSA from Fund I, II, III and retirees from Fund IV can transfer their RSA contributions to the Interest-Free Fund (Fund VI) by sending a formal request to the PFA in accordance with the provisions of the RSA Multi- implementation of funds and section 7.6 of the investment regulations dealing with transfers between types of funds within an ATP.
“The interest-free fund offers a viable alternative to conventional interest-based financial instruments for the investment of pension funds,” he said.
The commission spokesperson said more information about the interest-free fund could be obtained from the commission’s website at www.pencom.gov.ng and on various PFAs.