Multi Funds


The Multi-Fund Investment Structure (MFIS) is an innovation by the National Pension Commission (PenCom) that provides a framework enabling pension contributors to have a guided say in the choice of the nature of investment assets which their contributions can be invested in.

Inception in 2005, contributors have always been grouped into two, namely, the RSA Fund for active contributors and the Retiree Fund for those who have retired from active service.

The essential difference between the two Funds was that the RSA Fund was allowed to have a higher content of risky assets than the Retiree Fund. The risk content has to do with the percentage of assets in the portfolio with variable incomes.

It is generally believed that the higher the risk in an asset class, the higher the income. On this premise, the argument has been that while some people prefer higher risks so as to predispose them to higher income, there are different levels of risk preference or appetite for different people.

Some people therefore felt that restricting contributors to the above two categories was not fair enough, prompting PenCom to think of ways of increasing the number of Funds to accommodate more shades of contributors.

In line with the above thinking, PenCom has created four different Funds, namely, Fund I, Fund II, Fund III and Fund IV and PFAs are required to transfer, in accordance with the guidelines, contributors in the previous two groups into the newly created four Funds, effective July 1, 2018. The existing RSA (Active) Fund is now to be replaced with Funds I – III, while the Retiree Fund now becomes Fund IV.


Download Mutli-Fund Transfer Request form



Features Of The Funds



Fund 1

  • Subscribers must be below 50 years
  • Must request to be moved to this Fund
  • Only subscribers in Fund II can move to Fund I
  • Will be more aggressive in terms of asset allocation
  • More risky assets included and thus, more target returns
  • Minimum of 20% of assets will be invested in variable income assets
  • Maximum of 70% of assets can be invested in variable income assets.

Fund 2

  • Subscribers must be below 50 years and will be moved into this fund automatically except they indicate otherwise
  • Can only move to Fund I
  • Will be moderately aggressive in terms of asset allocation
  • Minimum of 10% of assets will be invested in variable income assets
  • Maximum of 55% of assets can be invested in variable income assets
  • Returns will most likely replicate the current RSA Fund’s ROI

Fund 3

  • Subscribers must be 50 years and above and will be moved into this fund automatically except they indicate otherwise
  • Can only move to Fund II [but not Fund I]
  • Will be more conservative in terms of asset allocation
  • Minimum of 5% of assets will be invested in variable assets
  • Maximum of 20% of assets can be invested in variable assets

Fund 4

  • This is the current Retiree Fund
  • Operated in accordance with guidelines of the existing Retiree Fund
  • Subscribers cannot move to Funds I, II or III
  • Will be more conservative in terms of asset allocation
  • Minimum of 0% of assets will be invested in variable assets
  • Maximum of 10% of assets can be invested in variable assets
  • Returns will be similar to the existing Retiree Fund’s

Frequently Asked Questions


01. How does this Multi-Fund classification apply to me as a contributor?

Previously, as an active contributor you could only belong to the RSA Fund and income earned by the Fund was distributed equitably to all contributors under the Fund. But now you are allowed to choose from amongst Funds I –III, depending on your age.

Contributors in Fund I have their contributions invested in assets that have a high content of variable income (risky) assets, which by investment logic also positions them for higher income. The degree of risk varies progressively from Fund 1 to Fund III.

Yes, each Fund, because of the mix of assets in its portfolio will produce its own level of income different from other Funds.

The creation of 2 additional Funds to make 4 was a response to the yearnings of many contributors who felt that they deserved the right to choose between Funds since different contributors have different risk appetites.

The unit value of the old Fund the day before the transfer has captured your share of the income earned to date. That unit value is used to calculate the transfer value using the number of units you have accumulated.

Once a year.

One change per year attracts no fee charge. Subsequent changes within the same year will attract fees at a fee yet to be announced by PenCom.

Depending on your age, every contributor, on the date of implementation must default to Fund II or III as described above. So on that date you will be in either II or III. But if you want to switch 1, you must apply in writing.

No. PenCom only created boxes (Funds) and attached specific levels of risks/returns to each box and then gave contributors a chance to choose which box to belong subject to some conditions (as listed above).

No, investment decisions with regard to selection of specific investment instruments are done by the PFAs who are duty bound to exercise due diligence and professionalism in their pre-investment analyses. The Multi-Fund regulation only allows contributors to select one out of the available Funds, subject to their age brackets. When you choose a Fund, you belong to a group and PenCom’s rules guiding that group applies to contributor in the group.

No, you will not be credited with the gain in fund 2 because your account has been moved out and whatever happens in the previous Fund does not affect you anymore. You will now be affected only by whatever happens in Fund 1 where you now belong.

You will belong to Fund 4 because you are already retired and Fund 4 is for retirees.

Every active worker looks forward to having a restful retirement time when he/she will fall back on his/her RSA balance for periodic pension payments from the PFA. Such payments are expected to be stable over the retiree’s expected life span. The whole essence of pension is to ensure that the retiree gets his or her benefits as and when due. Risk is the probability that an adverse situation will occur with respect to the object in question. A typical adverse situation in pension benefit payment is that funds are not available to meet the payments as and when due. If that happens, then the whole purpose of pension is defeated. For this reason, anything that will jeopardize the chances of a pensioner getting his benefits on retirement is a source of risk. It is therefore necessary to consider how close to retirement age a contributor is, in deciding the level of risk to expose the contributor’s RSA balance to. This is why, as far as PenCom is concerned, the risk tolerance level should decrease as one approaches the retirement age.

No, as long as a subscriber is an active RSA holder, he cannot choose how much or when to withdraw from his retirement savings account. However, in certain circumstances, e.g. when a contributor is out of job for up to four months, the law allows him to withdraw 25% of his RSA balance. He has full access to his RSA balance upon retirement but subject to PenCom regulations.

Variable income instruments are investments that generate returns that cannot be pre-determined from the date the investments were made. The returns on the investments vary from day to day, making the investment values volatile. It is this volatility that introduces the risk element to the investment. For example, quoted shares in the stock market are classified as variable income assets because the price may rise or fall tomorrow; no one is sure. But a bank deposit is classified as a fixed income asset because from the commencement date, the interest rate and tenor (e.g. 12% p.a. for 90 days) are known. Variable income instruments include Ordinary shares, Collective Investment Schemes (CIS) such as Mutual Funds, Private Equity Funds, Infrastructure funds, Real Estate Investment Trust.

This is an opportunity to confirm the correctness of your records by visiting any of our offices and, if need be, regularize your personal data.

The multi-fund structure provides more alignment between your retirement goals, risk appetite and age. At a young age, you can afford to take high risks with your contributions which may result in immediate high or low returns. At that age, any immediate loss could be recouped in the course of time, because your retirement age is still far ahead. However, if a contributor is close to retirement age and chooses a high risk Fund, which returns an immediate loss, there may not be enough time to recover the loss before the retirement age crystallizes. So, as one approaches retirement age, one’s account is domiciled in a Fund type with a lower risk profile, where there is a higher probability that the balance to be moved to the Retiree Fund (IV) on retirement would have attained a relatively stable status.