In 2021, the National Pension Commission (PenCom) introduced an additional fund into the multi-fund structure. This fund is known as the RSA Fund VI or The Non-Interest Fund. Consequently, the Commission in August 2021, released the operational framework for the Non-Interest Fund (Fund VI).
As the name suggests, the pension fund will invest its Fund in non-interest bearing activities unlike the other types of pension funds under the multi-fund structure.
This is in line with the laid down Sharia and other similar laws where the idea had emanated from.
In addition to the investment in non-interest bearing investment instruments, the fund is also prohibited from investing in the entities engaged in the following activities:
1. Gambling/betting
2. Alcohol
3. Pornography
4. Weaponry
5. Speculative activities
These aforementioned are considered non-ethical and prohibited according to the Shari’a, the Islamic jurisprudence on which the RSA Fund VI investment philosophy is primarily based upon.
The Fund therefore will invest in non-interest bearing and ethical investment bouquets such as:
1. Sukuk (government, corporate and supranational)
2. Shari’ah-compliant money market
3. Shari’ah-compliant ordinary shares (including GDRs)
4. Shari’ah-compliant infrastructure funds
5. Shari’ah-compliant private equity Funds
6. Shari’ah-compliant Open/Closed/Hybrid Funds
7. Shari’ah compliant real estate funds
Who can join the pension fund?
The Fund is open to all eligible participants in the Contributory Pension Scheme (CPS) who are the active and retired contributors under the CPS.
This means that RSA contributors who are already in Find I, II and III are eligible to join the RSA Active Fund VI, while the retired contributors in Fund IV can join the RSA Retiree Fund VI.
Those in the Micro Pension Plan (MPP) are not eligible to join Fund VI at the moment.
Is the Fund only for the Muslim Contributors?
The Fund is open to all eligible contributors under the CPS and not just to the Muslims because it is Shari’a compliant.
Any contributor that values ethical investment as a matter of principle will find the Fund as a welcome idea.
The acceptance level of the RSA Fund VI is encouraging as it has considered the plight of a section and also significant stakeholders within the CPS industry who as a matter of principle and choice have a preference for ethical investment.
In addition, it is also a fit into the financial inclusion drive of the pension industry regulator, PenCom, as it aims to expand the reach and acceptance of the CPS to all.
How do I join the RSA Fund VI?
To join the RSA Fund VI as a new contributor in the CPS, all that is needed is to indicate your choice at the point of filling the RSA form with your PFA. This will automatically enroll you into the Fund.
However, as an existing contributor, to move to the Fund, you will instruct your PFA either in writing or by email, whichever is acceptable by them, to move your RSA balance to the new fund. It is that simple.
All these also come at no cost.
You can contact your PFA for more information on this especially relating to their peculiar organisation.
