•Explains Reasons Behind Pension Industry Non-Interest Advisory Committee
By Victor Ahiuma-Young
In a major bold step, the National Pension
Commission, PenCom, has announced an ambitious initiative to revolutionize the payment of benefits to pensioners under the Contributory Pension Scheme, CPS.
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The initiative, among other things, aims to speed up the payment of benefits to Retirement Savings Account, RSA, holders from June 2025. According to the Commission in a circular on the Approval of Benefits to Holders of Retirement Savings Accounts by Licensed Pension Fund Operators, effective from June 1, 2025, Pension Fund Administrators, PFAs, will no longer be required to seek approval or obtain a “No Objection” from PenCom before processing and disbursing benefits, including Programmed Withdrawal, Retiree Life Annuity, and Temporary Loss of Employment benefits, among others.
Nevertheless, the circular maintained that PFAs must continue to submit requests for approval to the Commission regarding depleted RSAs and death benefit applications, in accordance with Section 8(2) of the Pension Reform Act 2014.
However, PenCom mandates PFAs to process and approve eligible benefit applications within two working days of receiving all required documentation, while Pension Fund Custodians, PFCs, must ensure payment of the approved benefits within 24 hours of receiving instructions from the PFAs.
The Commission insists it will continue to monitor the process through deployed technological platforms and other regulatory instruments to ensure strict compliance.
According to PenCom, “RSA holders are reminded that the timely submission of necessary documentation to PFAs is essential to accessing benefits. Prospective retirees are advised to submit all relevant documents at least six months before retirement. All benefit applications must be supported by the documentation prescribed in the Commission’s Regulations and Guidelines.”
Meanwhile, PenCom has explained the reasons behind the recent inauguration of the Pension Industry Non-Interest Advisory Committee, PINAC, saying among other things, it is aimed at providing an investment option that is free from interest-based instruments while still ensuring competitive returns for contributors.
Recall that the Commission had, on Monday, March 3, 2025, in Abuja, the Federal Capital Territory, FCT, inaugurated PINAC as part of efforts to deepen financial inclusion and expand the frontiers of non-interest pension products.
According to the Director-General, DG, of PenCom, Ms. Omolola Oloworaran, the Commission remains committed to fostering innovation, inclusivity, and sustainability in pension administration.
She explained that the establishment of the advisory committee is a testament to the resolve to ensure that the CPS caters to all segments of society.
The Director-General said, “This includes those who prefer financial solutions that align with their ethical and religious principles. In recent years, we have witnessed increasing demand for non-interest financial products, driven by a growing awareness of ethical finance principles and the need for alternative investment avenues.
“The introduction of Non-Interest Pension Funds (Fund VI) was a groundbreaking step in this direction, providing an investment option that is free from interest-based instruments while still ensuring competitive returns for contributors. The development of the segment requires structured guidance, expert insights, and collaborative strategies to navigate regulatory, operational, and market challenges. This is precisely why we have established this advisory committee to serve as a think tank, providing recommendations on best practices, governance structures, product development, and compliance with non-interest finance principles.”
She listed the committee’s mandates to include “enhancing regulatory and supervisory frameworks to ensure that non-interest pension products remain transparent, secure, and aligned with global best practices. Other mandates include boosting market development and awareness, driving financial literacy, and public education on the benefits of non-interest pension funds, thereby increasing participation in the CPS.
“The committee will also identify and recommend viable non-interest investment opportunities that ensure sustainable growth and competitive returns for contributors. It also has the mandate of collaboration and stakeholder engagement, fostering partnerships with financial institutions, industry experts, and regulatory bodies to develop a robust and thriving non-interest pension fund ecosystem.”
Oloworaran informed that the broader impact of the successful implementation of non-interest pension offerings would enhance financial inclusion and attract a significant portion of the unserved and underserved population into the system.
The Director-General explained that the process aligned with President Bola Tinubu’s broader agenda for financial sector deepening, economic diversification, and social security enhancement.
While commending the committee members, she advised them to put their best into the initiative by bringing lasting benefits to the Nigerian pension industry.
The Chairman of PINAC, Prof. Adam Abubakar, described the inauguration of the committee as a significant milestone in the Nigerian non-interest financial industry.
Abubakar said that PINAC played a pivotal role in the development and growth of Fund VI and the broader non-interest financial sector in the country. Other members of the committee include Mr. Muhammad Lere, Dr. Oyewale Akeem, Dr. Muhammad Ishaq, and Mr. Ahmed Suliman.
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