With effect from July 2018, contributors to Nigeria’s contributory pension scheme (CPS) will now have options regarding how their contributions are invested and have the prerogative to direct their Pension Fund Administrators (PFAs) to invest their pension contributions in line with these options.

Since 2004, when the CPS was introduced, the pension contributions of active contributors (those still in service) have been managed by their respective PFAs in a Single Investment Fund with the PFA choosing the actual portfolio composition and investment instruments in line with the Regulations for Investment of Pension Funds issued by the National Pension Commission (PenCom).

With the new Multi-Fund Structure to be implemented from July 2018, three distinct Investment Funds will be available to active contributors called Fund I, Fund II, and Fund III, while the retirees managed by the PFAs will be placed in Fund IV. The core difference between the distinct Funds will be the amount of risk inherent in each fund driven by the minimum and maximum amounts of variable income instruments that each Fund can contain based on the Investment Regulations.

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