Fund VI offers Shari’ah compliant savings for pension contributors – Bajomo


Following the establishment of the pension non-interest fund, expected to commence in the fourth quarter of the year, NIKE BAJOMO, executive director, business development, Stanbic IBTC Pension Managers, speaks to IFEOMA OKEKE, on how the new Fund VI will impact growth of the pension industry as well as development of the economy.

The National Pension Commission recently released the Operational Framework for a Non-interest Fund, in line with the clamour for such a fund. Can you briefly tell us about the Fund VI?

Fund VI was borne out of the desire to serve contributors who wish that their retirement funds be invested in non-interest instruments, in line with Islamic Shari’ah principles. These contributors can opt for Fund VI where their Retirement Savings Accounts (RSAs) would be managed in line with these principles. This is consistent with the principle behind the multi-fund structure where contributors can choose their preferred fund based on their risk profile subject to regulatory provisions.

Fund VI is broken down into two (2) funds to accommodate contributors in the active RSA funds (RSA Funds I – III) and retirees (in RSA Fund IV).

Active RSA Fund VI – This is for RSA holders who are currently below 50 years or above 50 and are still actively engaged in employment or managing an organisation with a desire for their pension assets to be managed according to Shari’ah principles.

Retiree RSA Fund VI – This is for current RSA retirees who are in Fund IV (retiree Fund) and desire to have their pension funds managed under the principles of Shari’ah.

Apart from its non-interest-bearing feature, what other features distinguish Fund VI from others?

From an investment point of view, Fund VI is prohibited from investing in assets, securities or companies involved in or tied to the production or trading of alcohol, pornography, weaponry, gambling or betting, speculation, interest earning ventures, nor other ventures of similar nature, which are contrary to Shari’ah principles.

This is certainly good news for Muslims who desire to follow the tenets of their faith in terms of investment, but can non-Muslims also take advantage of this Fund?

Absolutely! Fund VI is open to everyone interested in having their pension funds invested in non-interest-bearing instruments.

Will retirement savings account holders who are Muslims be transferred to the Fund automatically, or is it by request?

Movement in Fund VI will be strictly by request only.

What is your assessment of the likely impact of the Fund on the overall investment strategy of Stanbic IBTC Pension Managers?

Our core investment philosophy of safety, liquidity, sustainable long-term returns, and robust risk management will continue to underpin our investment strategy. Furthermore, as more contributors elect to move into Fund VI, it is expected that our asset allocation will equally shift to reflect increased exposure to Shari’ah compliant securities such as Sukuks, Shari’ah compliant Infrastructure Funds, Private Equity Funds as well as Open/Closed-End Funds.

Stanbic IBTC has a strong pedigree in managing funds invested in Shari’ah-compliant assets. Only recently, your sister company Stanbic IBTC Asset Management was adjudged the Best Islamic Financial Institution in Nigeria for 2021 by Global Finance magazine. What message do you have for those who may want to switch to this new Fund?

It suffices to say that Stanbic IBTC Pension Managers has a strong competitive advantage in managing Shari’ah compliant assets as we already have tested systems and processes in place. In addition, our access to extensive research, being a part of the over 155-year-old Standard Bank group, our accessibility via physical and digital channels, and our commitment to excellent client experience are assets that every contributor stands to benefit immensely from alongside our expertise in Islamic Funds Management.

What opportunities does this new Fund represent for Stanbic IBTC Pension Managers?

The introduction of the new fund (RSA Fund VI) gives us another opportunity to showcase our expertise in fund management while assuring long term competitive returns to contributors who opt for this new Fund. With the increasing requests from clients for an investment vehicle tailored towards their religious and personal beliefs, the advent of the RSA Fund VI would help us cater to this client need. The non-interest fund will further engender trust in the Contributory Pension Scheme (CPS) and help create more awareness of the necessity for retirement savings and investments.

How do you intend to ensure that your RSA holders and other prospects are fully aware of the new Fund and how to take advantage of it?

Our clients are being notified via various channels as we did at the kick-off of the multi-fund structure; short code messages (SMS), Emails, digital and social media channels are some of the channels which will be utilised in communicating the availability of the Fund to our clients. Our team of dedicated, qualified relationship and client experience managers will also ensure that our clients are appropriately advised on the objectives of the Fund and how to opt in, via direct call and other such channels.

Your yearly pre-retirement series are quite defining. In what other ways do you engage your market to ensure people have the relevant information and knowledge?

Client engagement is key to our business. Apart from the pre-retirement seminar, we hold interactive RetireWell sessions where we provide key updates to clients on what they need to know before retirement and how to transition seamlessly when they retire. Beyond these client sessions, regular communications are sent to our clients via SMS and email with relevant information on developments in the Industry. We also support our employer partners via bespoke employer forum sessions for private and public sector employers respectively. We utilise these sessions to again, share updates on industry platforms and how to better support their employees, among others.

What is your assessment of the impact the transfer window has so far had on your company and the industry as a whole?

The transfer window opened in Nov 2020, allows Retirement Savings Account (RSA) holders to switch from one Pension Fund Administrator (PFA) to another. It corrected the absence of choice by enabling RSA holders to move their accounts to their PFA of choice once a year. For us at Stanbic IBTC Pension Managers, the transfer window is a huge opportunity to add value to the lives of more Nigerian workers by providing them with the value we offer our clients anchored in safety, transparency, reliable service, convenience, and consistent, long term returns.

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