The PRA, 2014

Object of the Investment Regulation

Pension Fund Assets Investment Regulation
Institutional Framework
General Principles
Authorized Markets
Allowable Instruments
Quality Requirements of Allowable Instruments
Conflict of Interest
Investment Limits
Performance Benchmark
RSA Retiree Fund
Violations of Investment Limits

Administration of Retirement Benefit

Documentation & Processes

Administration of Programmed Withdrawal Benefits by PFAs

Objectives of Investment Regulation
Investment of Pension Funds/Assets is strictly regulated by Pencom and PFAs and PFCs are to strictly comply with the guidelines on investment

Ensure adequate, affordable and sustainable benefits to employees

Secure safety and security of the funds

Ensure adequate liquidity to pay all pension benefits of employees as and when due

Achieve an optimal trade-off or risk and return through strategic asset allocation

Institutional Framework
Pension Fund Administrator (PFA)
Maintain “Active and Retiree Funds” as provided by the regulation
Establish an Investment Strategy Committee and Risk Management Committee
Investment Strategy Committee formulates internal investment strategies in compliance with the Regulation in cognizance of the macro-economic environment as well as investment objectives and risk profile
The internal investment strategies shall be approved by Board of Directors at least once every year or the frequently as changes may occur in the macro-economic environment
Risk Management Committee determines the acceptable risk profile of each investment portfolio
Draws up risk assessment and measure systems, monitor their portfolio against risk tolerance limits and other related functions
Renders reports to the Board of Directors and Commission at least once every quarter
Each Committee will have Non Executive Director and Independent Director shall Chair the Committee

Institutional Framework – cont’d
Pension Fund Custodian (PFC)
Takes written instructions from licensed PFAs with respect to the PFAs investment and management of pension fund assets held in custody of the PFCs on behalf of the contributors
Shall not contract out the custody of pension fund assets to third parties except for allowable investments outside Nigeria
Obtains prior approval from the Commission before engaging a global Custodian for such allowable foreign investments

National Pension Commission
Apex body to regulate pension matters
Approve, licence and supervise PFA, PFC and CPFA
Provide guidelines on pension matters
Formulate, direct and oversee policy on pension matters
Maintain National Data Bank on pension matters

Investment of Pension Fund – cont’d
Investment of Pension Fund – cont’d
Administration of Retirement Benefits – Lagos State
RSA-Holder shall have access to his Retirement Savings Account upon:
Retires at the age of 60 years or after having spent 35 years in service
Retires at the age of 50 years (whichever is later)
Retires on health grounds with a certificate from a qualified physician or a properly constituted Medical Board – shall utilize the balance standing to the credit of his RSA, for one or a combination of the following purposes:

Programmed withdrawals, based on expected life span; or
Purchase of annuity for life with monthly or quarterly payments and;
Lump Sum payment.
Early retirement = maximum 25% in RSA, 6-months post retirement and the employee does not secure another employment; (now 4 months by PRA 2014)
Retirement at age 50 or more = balance in RSA must be sufficient to provide 50% of annual remuneration as at the date of retirement.

Making withdrawals on Death of RSA holder:
RSA balance is applied in accordance with the Act in favour of the beneficiary under a will or the spouse and the children of the deceased or in the absence of a wife and child, to the recorded next-of-kin or any person designated by him or any person appointed by the probate registry as the administrator of the estate of the deceased

Payment will be made through the PFC to individual bank accounts with any bank anywhere in Nigeria subject to PenCom guidelines.
Documentation- Process
Lagos State Government Workers: (Upon Retirement)

For normal retirement at age 50 0r 60

Voluntary retirement or temporary loss of job

Death cases

Retirement on the ground of health/disability

Missing person

Restructure/Disengagement/Right sized

Documentation & Processes



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