Take Charge of Your Wealth Creation Journey: Make Smart Choices with Your Fund

Mr. Olusakin Labeodan, Managing Director/CEO, Leadway Pensure

By Olusakin Labeodan

The global financial landscape is shifting, and more than ever, individuals increasingly recognise the importance of controlling their economic wellbeing for a financially secured future. Yet, regarding pensions, the traditional approach remains largely passive and must be more involved in intelligent financial planning and investment decisions.

It is time to challenge this status quo by being less passive and more involved in how their pension savings are invested, especially given the flexibility Nigeria’s Retirement Savings Account (RSA) structure provides.

With an improving life expectancy on hand coupled with the rising cost of living on another hand, pension holders must actively shape their future by opting for funds that align with their financial goals and risk appetite. The case for increased involvement has never been more apparent.

 A Shift from Default to Deliberate: Navigating RSA Fund Options

The RSA fund structure offers flexibility based on age and risk tolerance, enabling contributors to align their pension investments with their financial objectives. It categorises pension savings into four distinct funds:

Fund I – An optional fund designed for individuals willing to take on higher risks for potentially greater rewards. It requires contributors to opt in, emphasising the proactive approach it demands formally.

Fund II – The default option for contributors aged 49 years and below. It provides a balanced

portfolio and is the default for younger contributors who have not opted for a different fund.

Fund III – The default for contributors aged 50 years and above, focusing on capital preservation, reflecting the reduced risk tolerance of those nearing retirement.

Fund IV – Exclusively for retirees, this fund prioritises stability and a lower-risk strategy to safeguard accumulated wealth.

The current structure appears sound, offering different investment strategies depending on one’s life stage. However, many contributors are placed into these funds by default, raising a fundamental question: Is the default option always the best for every individual? I have enumerated the options available to Pension fund contributors and how they influence investment decisions.

The Untapped Potential of Fund I

We live in an era of personalisation—everything, from lifestyle to consumer spending, is tailored to our preferences. Should the same not apply to how we manage our pensions?

Fund I stand out as a compelling choice for those with a higher risk tolerance and a longer investment horizon. It caters to individuals seeking more than the moderate growth offered by Funds II and III, those willing to take greater risks to maximise their retirement outcomes.

For younger contributors, particularly those in their 30s and 40s, Fund I presents an investment opportunity to benefit from market volatility and leverage time in their favour. Yet, because it is voluntary, too few contributors opt into it—not due to unsuitability, but often because they are unaware of its benefits or reluctance to engage in their pension planning actively.

This insight does not make Fund I an investment for everyone’s appetite. It’s one to be made after carefully considering one’s financial position, investment experience, and risk tolerance. However, pension fund administrators (PFAs) have a duty to raise awareness of this option and its possibilities. The key lies in informed decision-making, in which many contributors need more awareness or engagement.

The Role of Pension Fund Administrators: Educators and Enablers

The role of pension administrators is critical. They are responsible for building an investment with the contributors’ fund to secure financial wellbeing in retirement. It is a delicate task as families trust their future wellbeing in the capacity to make the right investment decisions whilst safeguarding their contributions.

However, they are also expected to hold the contributors’ hands during this long journey. Contributors can only make pivotal decisions with the right information and support. Beyond expertly managing funds, PFAs must also serve as educators and enablers, empowering pension holders to make choices aligned with their financial goals.

This is not merely about offering options; it’s about fostering a culture of financial literacy, inclusion and empowerment. PFAs should demystify the fund structure and actively communicate the benefits of each fund. Many contributors, for instance, need to be made aware that they have the right to switch between RSA funds or adopt a more growth-oriented strategy while still young enough to reap the benefits. A more transparent and user-friendly approach to educating clients could significantly improve their long-term financial security.

Changing the Narrative: Your Pension, Your Choice

For pension holders, this is a call to action. Gone are the days when defaulting passively into a fund was enough. The world of wealth creation has changed, and so has the potential to grow your pension. In times of economic uncertainty, taking control of where your pension is invested can offer greater security and peace of mind.

The power to choose your pension’s investment direction is essential to financial autonomy. Contributors must understand that involvement in this decision can substantially affect their retirement outcomes.

Ultimately, the question is not whether Fund I is right for you—it’s whether you are ready to engage with your pension in a way that reflects your future ambitions. Taking control of your retirement plan now could unlock the financial freedom you seek in the future. After all, your pension is not just an account—it is your future.

At Leadway Pensure, securing a prosperous retirement is about saving consistently and owning your financial journey. We encourage all contributors to explore the full spectrum of available investment options and actively shape their retirement future, including making Additional Voluntary Contributions (AVC).

With proper planning, active participation in your pension investment can be the difference between a comfortable retirement and a financially secured one.

Olusakin Labeodan is the Managing Director/CEO, Leadway Pensure