Development
The National Pension Commission (PenCom) has set up the Pension Industry Non-Interest Advisory Committee (PINAC) to drive the expansion of non-interest pension funds in Nigeria.
Strengthening Financial Inclusion
At the inauguration in Abuja, Omolola Oloworaran, PenCom’s Director-General, emphasized the importance of this initiative. She stated that it would promote financial inclusion and broaden ethical pension options.
According to her, growing interest in non-interest finance is driving demand for alternatives. She explained that many Nigerians now seek ethical investment options free from interest-based instruments.
“The need for this committee is clear,” Oloworaran said. “Non-interest pension funds (Fund VI) offer an ethical investment route while ensuring competitive returns.”
Purpose of the Advisory Committee
To develop this sector, PenCom believes structured guidance is necessary. The committee will provide expert advice on best practices, governance, and compliance with non-interest finance principles.
Its key responsibilities include:
- Transparency and Security: Ensuring non-interest pension funds align with global standards.
- Market Awareness: Increasing public knowledge and financial literacy on non-interest pension benefits.
- Investment Strategy: Identifying viable, ethical investment opportunities.
- Collaboration: Partnering with industry players to strengthen the ecosystem.
Oloworaran noted that the initiative would attract more people to the pension system. She added that it aligns with Nigeria’s broader goals for economic diversification and social security.
Nigeria’s Push for Ethical Pension Management
She also stated that embracing non-interest finance will position Nigeria as a leader in ethical pension management. This, in turn, will boost investor confidence and encourage sustainable economic growth.
PenCom assured committee members of full support. Oloworaran urged them to approach their task with commitment and a vision for excellence.
Shari’ah Compliance and Stakeholder Engagement
Speaking at the event, Muhammad Muazu Lere, Chairman of PINAC, commended PenCom’s decision. He stressed the importance of Shari’ah compliance in building trust and credibility.
“A strong Shari’ah monitoring system is crucial,” Lere said. “It ensures the integrity of Islamic financial institutions and strengthens investor confidence.”
Lere revealed that PINAC will work with key regulatory bodies. These include the Central Bank of Nigeria’s Financial Regulation Advisory Council of Experts (FRACE), the Securities and Exchange Commission (SEC), and the Takaful Advisory Council (TAC) of the National Insurance Commission (NAICOM). This collaboration aims to align operations with global best practices.
Raising Awareness for Fund VI
Despite Fund VI’s existence for several years, awareness remains low. Lere noted that many Retirement Savings Account (RSA) holders are still unfamiliar with it.
He urged PenCom to intensify public education, similar to its campaigns for the Micro Pension Plan.
“The lack of awareness has slowed Fund VI’s growth,” Lere said. “We need more enlightenment efforts to help Nigerians understand its benefits.”
The committee’s work is expected to drive significant changes in Nigeria’s pension industry. As ethical finance gains traction, non-interest pension funds could play a major role in the nation’s economic future.
