Transfer window known as Retirement Savings Account Transfer System (RTS) was launched by PenCom on the 16th of November, 2020 in Abuja, in accordance with Section 13 of the Pension Reform Act, 2014 which allows contributors to move their Retirement Savings Account (RSA) through a transfer window from one Pension Fund Administrator (PFA) to another, provided that it is not more than once in a year.
The RTS has four quarters in a year, which are; 31st of March, 30th of June, 31st of September, and 31st of December in which contributors can change their PFAs once in a year, adding that, the over 2,100 applications received so far, would be processed for the 31st of December, 2020 window.
A month to the above mentioned dates, the concerned pension fund operators must have submitted necessary documentation to the regulatory body, informing it of the amount leaving their kitty and the RSA holders concerned, so as to give ample time for both PenCom, the affected PFAs and the receiving PFAs to plan ahead.
On the part of the contributors, majorly, fingerprint, which serves as their consent, is a unique criteria to switch PFAs. Although, he expects some pension fund operators to be on the losing end and some proactive ones winning the disgruntled contributors, he stressed that, the overall benefits, is to instill healthy competition among operators, which would, in return, lead to better service delivery and improved investment returns on pension assets.
Similarly, the head, Corporate Communications, PenCom, Mr. Peter Aghahowa, said the activation of the RSA transfer process will engender competition and improve service delivery in the pension industry, while asserting the right of RSA holders to determine which PFA manages their pension contributions and retirement benefits.
Addressing participants at the conference, the new president, PenOp, Mr. Wale Odutola, who is also the Managing Director/CEO, ARM Pension PFA, said, pension fund operators have done the necessary requirement by upgrading their IT systems in a bid to enhance seamless pension account transfer among operators, while PFAs have attached much importance to better service delivery.
He believes this is a concept that will change service delivery in the entire pension industry landscape, a development, he said, would benefit the contributors and Contributory Pension Scheme(CPS) retirees the most.
According to him, the ultimate aim is to grow the pension industry, make the pension funds have a bigger impact on the economy, and give good investment returns to contributors, shareholders and relevant stakeholders, and we, the operators are a critical stakeholder in this process and we all will make it work.
Who Benefits
This development is in line with the commission’s desire to ensure that all RSAs holders are able to exercise their rights of transferring their RSAs from one PFA to another.
Experts also believed that providing contributors with a transfer option will boost their confidence in the scheme.
According to Section 11(2) of the Pension Reform Act 2004, an employee reserves the right to migrate from one PFA to another without adducing reasons, but may not do this more than once in a year.
The development will put some of the leading PFAs, including ARM Pensions, Stanbic IBTC pensions, Premium Pension Limited and Sigma Pensions Limited under pressure to make adjustments or lose their clients to competition.
Managing Director/Chief Executive, Credent Investment Managers Limited, Mr. Ibrahim Shelling, recently said to one of the media organization that the transfer window option would be a game-changer for the industry.
“The immediate implications would be that PFAs that have not been offering good customer service and portfolio returns to their customers may see large fund outflows to other PFAs.
“The service delivery of operators will certainly need to improve drastically in other to compete, which bodes well for the customers.”
According to him, the PFAs will also need to improve on investment management by providing competitive returns for customers in order to attract more funds.
