The National Pension Commission (PenCom) has introduced a non-interest fund for contributors.
The PenCom explained that the new fund will be for contributors who prefer investments in non-interest money and capital market products.
The commission, in a statement, said the non-interest fund offers a viable alternative to the conventional interest-based financial instruments for pension funds investment.
PenCom said the non-interest fund, better known as fund VI, complies with the provisions of Islamic commercial jurisprudence and any other established non-interest principles.
The commission also said it had issued an operational framework for the fund.
According to it, “This is in furtherance of the implementation of the Multi-Fund Investment Structure, which seeks to provide investment portfolio choices to pension contributors and retirees.”
The Financial Regulation Advisory Council of Experts (FRACE) has certified that the operational framework issued by the commission complies with non-interest (Shari’ah) finance principles.
It said that the non-interest fund would be separated into two funds for Active RSA holders and retirees, respectively.
“RSA holders in Fund I, II, III and retirees in Fund IV are eligible to move their RSA contributions to the Non-Interest Fund (Fund VI) by making a formal request to the PFA, in line with the provisions of the RSA Multi-fund Implementation Guidelines and Section 7.6 of the Investment Regulation dealing with Transfers between Fund Types within a PFA.”