Pension contributors, experts want RSA transfer window opened
…We’re working on it - PenCom
Retirees and active pension contributors under the Contributory Pension Scheme (CPS) want the National Pension Commission to authorise RSA transfers across Pension Fund Administrators (PFAs).
The Pension Reform Act, 2014 (PRA, 2014), allows RSA holders to switch PFAs if they so desire.
Speaking exclusively to Daily Trust, an RSA holders, Ismail Umar, said if savings accounts can be opened and closed as the owner deems fit in banks, RSA holders should also be allowed to transfer their RSAs to PFAs of their choice periodically.
The PRA, 2014 provides that an employee may, not more than once in a year, transfer his or her RSA from one PFA to another without producing any reason for such transfer.
Section 13 of the PRA 2014 also provides that, “subject to guidelines issued by the commission, a holder of a retirement savings account maintained under this Act may not, more than once in a year, transfer his account from one Pension Fund Administrator to another.”
Despite this provision, PenCom is yet to authorise PFAs to allow RSA holders to transfer their RSAs from one PFA to another.
The implication is that RSA holders with underperforming PFAs in terms of return on investments are stuck with such PFAs as they cannot move their contributions to PFAs with better history of high returns on investment.
Speaking on the need for the apex pension regulatory agency in Nigeria to allow transfer window, Umar said he chose his PFA without informed information on its performance.
He said he has now contributed to his RSA for years now and has discovered that his PFA performs below the average return on investment in the pension industry.
Another RSA holder, Hauwa Ibrahim, lamented her inability to merge her two RSAs due to the transfer window status.
She revealed that she accumulated some funds in one RSA in a PFA before she got a job in another company where they opened another RSA for her in another PFA.
She said she was shocked when the first PFA told her she could not transfer her funds into the second account in another PFA.
An economist, Dr. Ozoemena Chidi, said the commencement of the transfer window has been long overdue in Nigeria’s pension industry.
Dr. Chidi told Daily Trust that there is already a “solid” legal backing for the transfer window and what is left is a policy statement, in the form of a guideline and commencement pronouncement.
Speaking on whether or not contributors’ inadequate data could affect the development adversely, the expert, who was a former banker, said once PenCom directs PFAs to allow RSA holders transfer their accounts, PFAs would take extra caution to authenticate all their contributors and retirees.
“It’s a gradual process. It took time before BVN was introduced in the banking sector. Before BVN, customers could do interbank transfers, open multiple bank accounts in different banks and even used third parties to withdraw their money. Banks steadily made sure that data supplied by their customers were as accurate as they could. This can be replicated in the pension industry,” he said.
Speaking recently in Abuja, the North Central Regional Manager of Trustfund Pensions Limited, Esuesiri Oshodi, though the National Pension Commission (PenCom) has not opened up the transfer window, a clean data base is essential before that can happen.
Oshodi said PFAs are sensitising RSA holders to update their data in line with Federal Government directive, and this would also ensure smooth opening of the transfer window.
Recently, PenCom introduced Enhanced Contributor Registration System (ECRS) and a statement released by the Commission’s spokesperson, Mr. Peter Aghahowa, indicated that the ECRS would speed up the opening of the transfer window in the pension industry in Nigeria.
Recall that as part of efforts to improve the integrity of contributors’ data, PenCom recently directed all RSA holders to provide their National Identity Number to their fund managers. In a new circular to Pension Fund Administrators, PenCom said the new development involved both active and retired RSA holders.
The directive conformed with the policy of the federal government of Nigeria that has made it mandatory that all Nigerians must have a National Identity Number.
By law, the NIMC has the mandate to implement the National identity system in Nigeria and the harmonisation by all data gathering agencies may be part of federal government’s strategy to have a clean National Identity System.
PenCom advised RSA holders to approach their PFAs to provide their Bank Verification Numbers (BVNs), NIN as well as other needed biodata. These latest innovations, ECRS and integration of BVN and NIN with RSAs, may be a golden opportunity for PFAs to clean up their databases to combat identity theft as well as fight fraud in the pension industry. A clean database in the industry will also pave the way for the introduction of the transfer window that will enable RSA holders to switch accounts from one PFA to another to get better services.
Daily Trust also gathered that PFAs have started using ECRS and updating the biodata of RSA holders to have a clean database that can help in the fight against identity theft that is gradually becoming a problem even in the pension industry.