What To Expect As PenCom’s Multi Structure Funds Takes Off In July

As the much awaited Multi funds structure initiated by the National Pension Commission (PenCom) is billed to take off on July 1, 2018, the operators are already positioning their portfolio to take advantage of the window to grow their top and bottom lines.

The main objective of the Multifund Structure for Retirement Savings Accounts (RSA), according to PenCom, is to resolve the challenge of Asset-Liability risk management experienced by Pension Funds.

This, the Commission stated, would be achieved by better aligning the risk and return expectations of Contributors; better matching of pension assets and liabilities; Diversification of pension fund portfolios, as minimum limits are set for aggregate investments in variable income securities, for each Fund.

The Commission further explained that under the Multi-Fund Investment structure regime all Pension Funds Administrators (PFAs) will offer the Multi-Fund structure for the RSA, adding that the Multi-Fund structure comprises four Funds, which differ from one another based on overall exposure to variable income instruments, while the different Funds’ portfolio mixes are designed to fit the ages and risk profiles of Contributors.

Also the Investment Regulation allows for Contributors to make active choices, while a Contributor in Fund II wishing to be assigned to Fund I shall make a formal request to the PFA, a Contributor in Fund III wishing to be assigned to Fund II shall also make a formal request to the PFA and a Retiree or Active Contributor who is 50 years and above shall not be allowed to choose Fund I.

On making active choice, transfers between Fund Types within a PFA is allowed as an active Contributor may switch from one Fund type to another Fund type within a PFA once in 12 months, without paying any fees, while any additional switches between Funds within a PFA would attract a fee, which would be determined by the Commission.

Mr. Eric Fajemisin, Managing Director and Chief Executive, Stanbic IBTC Pension Managers Limited thus explained: “The Multi-Fund Structure categorises 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 a 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 a very low-risk appetite.  Fund 4 is retirees who have the lowest risk profile of all categories.

He noted 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.

On what his company is doing in preparation to take advantage of the new opportunity, the CEO said: “For Stanbic IBTC Pension Managers Ltd, we have various levels of engagements with stakeholders. About nine years ago, we introduced the retirees’ forum, a multi-city roadshow to interact with retirees, foster reunions and unpack fresh developments in the industry.

This was followed in 2014 by the pre-retirement seminars, another multi-city platform designed to encourage people to embrace retirement planning.  In the same year, we also introduced the employers’ forum, another industry-wide initiative to encourage discussions on Nigeria’s pensions sector and to help more Nigerians participate in the fledging CPS. These initiatives, among others, have gone a long way in deepening participation in the pension scheme, and we will continue to do more.

MrFajemisin added that the proposed micro-pension scheme is one initiative with great potential capable of landing the industry into its next phase of growth saying: “Regardless of the inherent challenges, the micro-pension scheme has the capability to deepen asset accumulation in Nigeria considering that 70 percent of Nigeria’s working population operates in the informal sector.

He highlighted improved standard of living for the elderly, safety of funds and access to other incentives, such as mortgage facilities, health insurance, and estate planning as other benefits of the proposed scheme. In addition are flexible contribution remittances, the opportunity to make a withdrawal prior to retirement and the enhancement of financial inclusion in the country.

Insurance Inclusion: Industry Rebranding Targets 150m Nigerians

The initiators of the ongoing insurance industry rebranding project have put an ambitious target for themselves as they seek to hit a 150 million insurance-compliant Nigerians at the end of the three-year exercise.

The N300 million project initiated by National Insurance Commission (NAICOM), which kicked off on June 1,  2018, seeks to extend insurance education and benefits to uninsured Nigerians and increase its patronage by over 2000 percent from the current 37million policyholders.

Mr. Oye Hassan Odukale, Insurer’s Committee Chairman on Publicity, said that the objective of the rebranding is to increase the number of customer’s from 37 million to more than 150 million of the Nigerian Population.

According to him, the NAICOM has commenced an N300  million rebranding project, aimed at changing the negative perception of the public towards insurance business, adding that the project, at the end of the day would appeal to Nigerians on the need to have one form of insurance policy or the other.

Hassan-Odukale added: “What we are doing is really rebranding. It’s not a new project; insurance is not new in Nigeria. What we are doing now is rebranding to sell ourselves to the public because we discover that people don’t know much about insurance, they don’t know what we do, they don’t know that you don’t need police on the road for you to buy insurance and we are going to tell the people what we do”.

Hassan-Odukale further explained that the project is a collective effort by the industry, National Insurance Commission (NAICOM), Nigerian Insurers Association (NIA), and all insurance companies licensed in Nigeria.

Mrs. EbelechukwuNwachukwu, Vice Chairman, Communications and Publicity Subcommittee of the Insurers Committee and the Managing Director, NSIA Insurance Limited said the campaign about taking the message of insurance to all Nigerians and to tell the insurance story on how the sector does impact on the lives of the people and businesses who embrace it.

According to her, insurance serves the economy to make those who suffer loss return to business, adding that the message will center around educating the insuring public on the benefits of insurance products to their lives.

She said: “The insurance industry serves the economy, we make people get back in business, children get back to school and family won’t suffer. We do a lot to support the economy and we want to tell our story and let everyone know what we have been doing overtime. We want to also encourage Nigerians to take up an insurance policy and it is a culture that everyone will begin to insure.

“Really, it is a culture every Nigerian and individual needs to adopt as they evolve and become a bigger family. So, the theme of this campaign is: “Rebranding Insurance Campaign and Creating Awareness for the Insurance Industry in Nigeria”.

“The first, as I said is to educate Nigerians and change their mindsets about insurance and its services and to let people know about insurance products. But this campaign is going to focus on compulsory products in the market and we are also going to focus on getting the industry to woo people buy insurance not under compulsion but as a need.

“The entire objective is to tell insurance story, let the public know how much claims we pay and how insurance has been taking care of businesses. And the last is to share to all Nigerians the role of insurance in managing lives at different stages from when you are in school when you are leaving school, when you settle down with family and when you are planning retirement. Insurance is the tool for planning. We want the public to know that this tool is available for them to use”, she said.