PenCom charts fee structure base for Micro Pension Fund
By Asishana John
In recognition of the challenges tied to implementing the Micro Pension Plan (MPP) by the Licenced Pension Fund Operators (LPFOs), the National Pension Commission (PenCom) has reviewed the fee structure of the Micro Pension Fund (MPF).
The industry regulator made this known via a circular on the current fee structure for the micro pension fund signed by Ehimeme Ohioma, Head, Surveillance Department and made available to Nigerian NewsDirect.
Calling for the need to mitigate the concern of depletion of the MPF, PenCom noted that the fee to be charged on Fund V would henceforth be based on the adoption of the hybrid assets and income-based fee structure of four categories.
While the first category, which consists Funds under Managements (FuM) between N1 and N5 million, would attract no fee charges, the second category (Tranche A), consisting FuMs between N5.01 million and N2 billion will attract asset based fees at 1 per cent of the net asset value, which is to be shared between the Pension Fund Administrator, PFA, (0.75 per cent) and Pension Fund Custodian, PFC, (0.25 percent).
PenCom added that for the third category (Tranche B), consisting of FuMs between N2.01 billion and N4 billion, 0.60 percent fee will be paid. Of this, PFA will take care of 0.50 while the PFC settles the remaining 0.10 per cent.
However, the last category, which is based on income, requires a fee of 7.5 per cent of income earned to be shared between (PFA 5 per cent), PFC (1.5 per cent), and PenCom (1 per cent).
The statement read in part, “In order to mitigate the concern of depletion of the MPF, no fee shall be charged until the Funds under Management (FuM) reaches a threshold of N5 million.
“Similarly, Pension Fund Administrators shall not charge fees once the daily value of the accounting unit of the fund falls below N1 to ensure that principal contributors are not eroded.
“In addition, the commission shall not participate in the micro pension fund fee regime until FuM of a PFA attains the threshold of N4 billion,” PenCom added.
