PenCom reduces fee charged by Pension Operators on Micro Pension Fund
The National Pension Commission (PenCom) has made changes to the fee structure for the Micro Pension Fund. PenCom said it observed the need to review the fee structure on the Micro Pension Fund (MPF), in the light of challenges in implementing the Micro Pension Plan (MPP) by Licensed Pension Fund Operators (LPFOs).
Accordingly, PenCom had undertaken extensive consultations on the appropriate fee structure for the MPF, which is expected to incentivize LPFOs to market the Micro Pension Plan (MPP) and grow Micro Pension Assets, in order to achieve the objectives of the MPP as outlined by the Guideline for Micro Pension Plan issued by PenCom.
In line with the above, PenCom has approved a new fee structure for the MPF (Fund V) as follows:
The fees to be charged on Fund V shall be based on the adoption of the Hybrid Asset and Income Based Fee structure.
The applicable fee to be charged would be based on Funds under Management (FuM) as presented in the table below;
Hybrid Asset & Income Based Fee Structure of the MPF
| TRANCHES OF FUM N | TYPE OF FEE |
|---|---|
| N1.00 – N5,000,000.00 | No Fee Charges |
| TRANCHE A – N5.01M to N2,000,000,000.00 (Fees will be charged once the Funds surpasses N5,000,000). | Asset based Fees @ 1% of NAV: PFA 0.75% and PFC 0.25% |
| TRANCHE B – N2,000,000,001.00 to N4,000,000,000.00 | Asset Based Fees @0.60: PFA 0.50% and PFC 0.10% |
| Above N4 Billion. (Tranche A and Tranche B plus any additional Funds obtained thereafter shall be based only on income earned) | Income Based Fees: 7.5% of Income Earned to be shared between PFA 5.0%, PFC 1.5% and PenCom 1%. |
In order to mitigate the concern of depletion of the MPF, the following additional conditions shall be followed:
No fee shall be charged until the Funds under Management (FuM) reach a threshold of N5 million
Pension Fund Administrators (PFAs) shall not charge fees once the Daily Value of Accounting Unit of the fund falls below N1.00 to ensure that principal contributions are not eroded
PenCom shall not participate in Micro Pension Fund fee regime until FuM of a PFA attains the threshold of N4 Billion.
PenCom noted that the Circular takes immediate effect and supersedes earlier Circulars on Fee Structure for the Micro Pension Fund.
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