PenCom sets up advisory committee to drive non-interest pension fund development

The National Pension Commission (PenCom) has inaugurated the Pension Industry Non-Interest Advisory Committee (PINAC) to enhance the development of non-interest pension funds in Nigeria.

Speaking at the inauguration ceremony in Abuja, Omolola Oloworaran, Director-General of PenCom, emphasized the significance of this initiative in deepening financial inclusion and expanding ethical pension offerings within the industry.

According to Oloworaran, the establishment of the advisory committee reflects PenCom’s commitment to fostering innovation, inclusivity, and sustainability in pension administration.

She highlighted the increasing demand for non-interest financial products, driven by a growing awareness of ethical finance principles and the need for alternative investment avenues.

“The Rationale for the Non-Interest Advisory Committee IS CLEAR. 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,” She stated

According to her, the development of this 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,” Oloworaran added

The newly inaugurated committee has been tasked with key responsibilities, including Ensuring transparency, security, and alignment of non-interest pension products with global best practices.

Market development and awareness, promoting financial literacy and increasing public education on the benefits of non-interest pension funds.

Investment strategy and innovation, identifying and recommending viable non-interest investment opportunities to ensure sustainable growth and competitive returns.

Collaboration and stakeholder engagement, building partnerships with financial institutions, industry experts, and regulatory bodies to create a robust non-interest pension ecosystem.

Oloworaran noted that the successful implementation of non-interest pension products would help attract a significant portion of the unserved and underserved population into the pension system and this aligns with the government’s broader agenda for financial sector deepening, economic diversification, and social security enhancement.

“By embracing non-interest financial principles, we are positioning Nigeria as a leader in ethical pension fund management, fostering investor confidence, and promoting sustainable economic growth,” she stated.

The PenCom DG urged members of the advisory committee to approach their mandate with dedication, foresight, and an unwavering commitment to excellence. She assured them of PenCom’s full support in ensuring the success of the initiative.

“Your collective expertise and insights will shape the future of non-interest pension funds in Nigeria, ensuring that we build a system that is not only inclusive but also resilient and globally competitive.

“PenCom stands ready to provide all necessary support to ensure the success of this initiative. We are confident that through your efforts, the pension industry will experience a new era of innovation and inclusivity.”

Also speaking at the inauguration ceremony, Muhammad Muazu Lere, Chairman of PINAC, applauded the National Pension Commission (PenCom) for entrusting the committee with this responsibility. He emphasized the critical role of Shari’ah governance in ensuring compliance, building trust, and enhancing the credibility of Islamic financial institutions.

“The importance of a Shari’ah compliance monitoring system cannot be overstated. It is essential for maintaining the integrity and effectiveness of Islamic financial institutions. Our role as PINAC members is not just a duty; it is a commitment to positively impacting the ethical fund space and upholding global best practices,” Lere stated

Lere highlighted PINAC’s intention to collaborate with key regulatory agencies, including the Financial Regulation Advisory Council of Experts (FRACE) of the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), and the Takaful Advisory Council (TAC) of the National Insurance Commission (NAICOM). This cooperation, he noted, would ensure that the committee’s activities align with international standards.

Despite the operational existence of Fund VI for several years, Lere pointed out that one of the major challenges facing its growth is low awareness among Retirement Savings Account (RSA) holders. He called on the Commission to intensify public education efforts about Fund VI, similar to the awareness campaigns conducted for the Micro Pension Plan.

“The lack of awareness has hindered Fund VI’s growth. It is crucial to conduct public enlightenment initiatives to educate Nigerians on its benefits and operations,” he urged.