As the pension fund continues to grow, hitting N24.6 trillion by June 2025, Pension Fund Administrators, PFAs, now have authorisation to invest part of the funds in foreign currency-denominated instruments.
PenCom also directed all PFAs and Pension Fund Custodians (PFCs) to report foreign currency pension contributions above $10,000 to the Nigeria Financial Intelligence Unit (NFIU) within 24 hours.
The authorisation became possible following the release of the ‘Guidelines on Foreign Currency Pension Contributions’ by the National Pension Commission, PenCom, yesterday.
It will be recalled that before now, only Closed Pension Fund Administrators, CPFAs, were allowed to invest in foreign currency-denominated instruments, while PFAs were barred from it.
However, the new guideline establishes the regulatory framework for Licensed Pension Fund Operators (LPFOs) to accept, manage, and invest foreign currency (FCY) contributions under the Contributory Pension Scheme (CPS).
According to PenCom, the objectives of the guidelines are to: expand access to the CPS for Nigerians earning in foreign currency, including those living abroad; provide a secure and transparent mechanism for making and managing foreign currency contributions; strengthen the investment potential of pension funds through diversified currency inflows; as well as ensure compliance with local regulatory requirements and international standards.
The guideline stated: “Retirement Savings Account, RSA, contributors living in diaspora shall open a Non-Resident Nigerian Ordinary Account (NRNOA), in line with CBN requirements and shall remit pension contributions from their NRNOA to the foreign currency collection account of the PFA with the PFC. RSA contributors resident in Nigeria shall open Domiciliary Accounts (DA) with the collecting bank of the Pension Fund Custodian (PFC) appointed by the PFA and shall remit pension contributions from their DA to the foreign currency collection account of the PFA with the PFC. Contributors shall remit pension contributions from their DA to the foreign currency collection account of the PFA with the PFC.
“PFAs shall invest foreign currency contributions within Nigeria in line with allowable investments set out by relevant provisions of the Regulation on Investment of Pension Fund Assets issued by the Commission; investments of foreign currency contributions shall be executed and retained in foreign currency (USD).”
VANGUARD.
