The National Pension Commission’s initiatives on micro-pension scheme, multi-fund investment structure and pension account transfer window are capable of putting the sector on a stronger footing. This was disclosed by the Chief Executive of Stanbic IBTC Pension Managers, Mr. Eric Fajemisin.
While speaking on the multi-fund structure that will become operational from July 1, 2018, he said that such reforms and innovations were necessary to maintain the strength and depth of the Contributory Pension Scheme.
Fajemisin stated, “The Retirement Savings Account’s multi-fund investment structure, which replaces the ‘one-size-fits-all’ arrangement that puts all active contributors into one RSA fund, will resolve the challenge of asset-liability risk management faced by the operators.
“By aligning the age with risk profile of the RSA holders to match the four funds, contributors will have a better chance to earn improved returns on their investments in proportion to their risk appetite.”
Fajemisin noted that the different categories of the multi-fund structure are Fund 1, Fund 2, Fund 3 and Fund 4.
According to him, Fund 1 is targeted at people of 49 years and below, who in the quest for higher returns are willing to take more risks; Fund 2 is aimed at people who are aged 49 and below, and still working but are satisfied with moderate returns and levels of risks.
Fund 3, he added, would target people 50 years and above but still working and have very low-risk appetite, while Fund 4 would take care of retirees with the lowest-risk profile of all categories.
The chief executive officer said, “Among its other benefits include improved standard of living for the elderly, safety of funds and access to other incentives such as mortgage facilities and health insurance.
“In addition are flexible contribution remittances, the opportunity to make withdrawals prior to retirement and the enhancement of financial inclusion in the country.”
While speaking on the micro-pension scheme, Fajemisin said it would help in deepening asset accumulation in the country and provide the crucial capital required for investment in critical sectors of the economy.
As an initiative designed to cover an estimated 70 per cent of Nigeria’s working population in the informal sector, he explained that the scheme would offer enormous benefits to the society and ensure improved standard of living for the elderly, guarantee the safety of funds and provide access to other incentives, such as mortgage facilities and health insurance, regardless of challenges associated with its seamless implementation.