Contributors lost on process as pension multi-fund investment structure begins July1
By Ahead of the planned take-off of the Multi-Fund Investment Structure in the nation’s pension industry on July 1, 2018, contributors are still lost on the sign-off process with Pension Fund Administrators (PFAs).
“The process of communicating with my PFA on which fund I want to move my money to is still not very clear yet”, says a contributor.
“I don’t know whether I will need to visit my PFA or make a telephone call to request for movement of the fund in my Retirement Savings Account (RSA) to a particular investment level”, he added.
Multi-Fund Structure is a new investment guideline being introduced by the National Pension Commission to bring flexibility in the investment and risk appetite of contributors and retirees based on their age and preference.
Eric Fajemisin, Managing director/CEO, Stanbic Ibtc Pension Managers Limited, said “I believe that PenCom and the operators will come up with a sign-off process before the commencement date of July 1, 2018.”
I want to also believe that there will be a documentation process before a PFA will honour contributor’s request. There should be a formal process I believe, the CEO stated.
Fajemisin elaborating further said the Multi Fund Structure categorizes pension fund investments into four funds by aligning the age and risk profile of RSA holders to match the four funds.
“Fund I is targeted at people of 49 years and below who want higher returns and are willing to take higher risks. Membership into this fund is strictly based on request. Fund 2 is aimed at people who are aged 49 years and below and still working but are satisfied with moderate returns and levels of risks. Fund 3 targets people 50 years and above but still working and have very low risk appetite. While Fund 4 are retirees who have the lowest risk profile of all categories.”
He further stated that the most outstanding feature of this scheme, apart from diversification of pension fund portfolio, is the resolution of risk appetite based on the various categories of funds.
“For PFAs, the multi-fund structure provides considerable flexibility in terms of risks associated with the four classifications. We shall speak more on this during the course of this forum.”
Glory Etaduovie, managing director/CEO, IEI-Anchor Pension Managers Ltd said 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 percent; Fund II: 10 percent; Fund III: 5 percent and Fund IV: 0 percent.
Effective from the date of implementation of the multi-fund structure, the PFAs shall allocate 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 shall be assigned to Fund II; active contributors who are 50 years and above as at their last birthdays shall be assigned to Fund III and Fund IV shall strictly be for RSA retirees only, analysts stated.
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