7 things to know about the Multi-Fund Structure
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The National Pension Commission (“PenCom”) recently published/released the Amended Regulation on Investment of Pension Fund Assets for the Pension Industry, introducing the Multi-Fund Structure.
The new investment guideline introduces a multi-fund structure, which would replace the “one size fits all” structure that puts all active contributors into one Retirement Savings Account (“RSA”) Fund without consideration for age or risk profile of such contributors.
The Multi-Fund structure is a framework that aims to align the age and risk profile of RSA holders by dividing the RSA Fund into four distinct Funds. The current RSA Fund has been sub-divided into three separate Funds, while the RSA Retirees Fund becomes 4th Fund.
The Multi-Fund structure provides more alignment between your retirement goals, risk appetite and age. Consequently, there will be a better chance for your pension assets to meet your expectations when you retire.
PFAs are expected to invest in such a way that the actual exposure to variable income instruments in Fund I is higher than the exposure in Fund II. Likewise, the exposure in Fund II shall be higher than the exposure in Fund III. Accordingly, the minimum exposure to variable income instruments by Fund Type shall be: Fund I: 20% Fund II: 10% Fund III: 5% Fund IV: 0%.
By the commencement of this Multi-fund Structure, the PFAs have allocated contributors to various Fund Types according to the following criteria: membership of Fund I shall strictly be by formal request by a Contributor; active Contributors who are 49 years and below as at their last birthdays have been assigned to Fund II; active Contributors who are 50 years and above as at their last birthdays have been assigned to Fund III, and Fund IV shall strictly be for RSA retirees only.
An active contributor may switch from one Fund type to another Fund type within a PFA, once in 12 months without paying any fees (subject to a formal application). Any additional requests for switches among Funds within a 12 month period by the active Contributor shall attract a fee, of an amount not less than a minimum value, to be determined by PenCom from time to time.