PenCom Reviews Fee Structure on Micro Pension Fund

The National Pension Commission (PenCom) said it has observed the need to review the fee structure on Micro Pension Fund (MPF) in the light of challenges in implementing the Micro Pension Plan (MPP) by License Pension Fund Operators.

To this end, PenCom in a circular, entitled “Circular on Fee Structure For the Micro Fund,” with reference: PENCOM/CIR/TECH/ISD/2021/14 signed by its Head, Surveillance Department, Ehimeme Ohioma, dated, May 4, 2021 and sent to all licensed pension fund administrators, mandated Pension Fund Administrators (PFAs) with micro pension fund under management below N5 million to stop paying fee charges.

It stated that the move was to mitigate the concern of depletion of the micro pension fund.

The Commission said no fee shall be charged until the funds under management reach a threshold of N5 million, stressing that pension fund administrators shall not charge fees once the daily value of the accounting unit of the fund falls below N1.00 and that this is to ensure the principal contributions are not eroded.

PenCom maintained that it shall not participate in the micro pension fund fee regime until funds under the management of a pension fund administrator attain the threshold of N4 billion.

The Commission said it had undertaken extensive consultations on the appropriate fee structure for the micro pension fund, which was expected to incentivize licensed pension fund operators to market the micro pension plan and grow micro pension assets, in order to achieve the objectives of the micro pension plan as outlined by the guideline.

The commission said in the line with the above, it has approved a new fee structure for the MPF.

It added that the fees to be charged on Fund V would be based on the adoption of the hybrid asset and income-based fee structure.

According to PenCom, the circular took immediate effect and supersedes its circular of December 19, 2019 on fee structure for micro pension fund.