Abuja, August 5, 2025 – Nigeria’s pension regulator, the National Pension Commission (PenCom), has rolled out a new type of pension fund called the Non-Interest Fund (Fund VI) — and it’s a game changer, especially for Muslims and anyone who wants to avoid interest-based investments.
What is this about?
If you’ve been contributing to your pension through a Pension Fund Administrator (PFA), you’ve probably never had a say in how your money is invested. Well, that’s changing.
Fund VI is a special pension fund that doesn’t invest in anything that earns interest — like regular bank savings or bonds — because those are considered haram (forbidden) under Islamic law. Instead, it puts your money into businesses and ventures that follow Islamic financial principles — meaning no riba (interest), no gambling, and no shady or unethical dealings.
Why is this important?
1. More Options for Everyone
Whether you’re Muslim or just someone who doesn’t want your retirement savings tied to interest-based systems, this gives you an alternative.
2. Trust and Transparency
The fund is certified by the Financial Regulation Advisory Council of Experts (FRACE), which ensures it sticks strictly to Islamic finance rules.
3. Inclusive Finance
A large number of Nigerians — especially in the North — don’t feel comfortable with traditional financial systems. This fund can help bring more people into the formal pension system.
4. Better Alignment with Your Beliefs
If your faith doesn’t support interest or certain types of business practices, you now have a pension option that aligns with your values.
So how does it work?
• All PFAs (those companies managing your pension) must create a Fund VI.
• There are two types: one for workers still contributing (Active RSA holders) and another for retirees.
• If you are currently in Fund I, II, or III (for workers) or Fund IV (for retirees), you can request to move your savings to Fund VI.
• Just reach out to your PFA and fill out a formal request — it’s your right under PenCom rules.
What are the risks or implications?
• Returns may be different
Since Fund VI avoids interest-based investments, the returns (profits) might look different compared to traditional pension funds. Sometimes they may be lower, sometimes better — it depends on market conditions.
• Limited investment options
Because it avoids certain sectors, there are fewer choices for where to put the money. But these are handpicked for safety, ethical standards, and compliance with Islamic law.
• Not automatic
If you want this fund, you have to request for it. PFAs won’t move you without your instruction.
• Potential for innovation
This move might trigger new ethical and Shariah-compliant financial products in Nigeria’s broader investment ecosystem.
Bottom Line
PenCom’s new Fund VI is a big win for financial inclusion in Nigeria. It allows people who were previously on the sidelines due to religious concerns to now save for retirement in a way that aligns with their values. It’s also a signal that Nigeria’s pension industry is evolving to meet the diverse needs of its people.
To get started or learn more, visit www.pencom.gov.ng or speak with your PFA directly.
