Thousands of pensioners in search of better returns and service moved billions of naira in the last six months as they changed Pension Fund Administrators (PFA).
Changing preferences of pensioners led to the significant movement of funds across various PFAs in the Nigerian pension industry with VG Pension and Stanbic among top PFA’s.
Data from the National Pension Commission, the regulator, indicated that 22,846 contributors changed PFAs in the first seven months of 2021.
Contributors’ dissatisfaction with previous administrators triggered most of this change. A provision in the pension law that allows this change resulted in N83.69 billion being moved across various PFA’s over the review period.
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According to section 13 of the Pension Reform Act 2014, pension contributors are allowed once a year to transfer their Retirement Savings Account (RSA) to any PFA of their choice.
Internal research using the websites of the top PFA’s concluded that the industry as a whole saw favourable returns, with 70% of them recording positive growth in overall return on investment (ROI) across their four different retirement savings accounts (RSAI-IV)
Factors that influence contributor choice
A major factor why contributors choose to change PFAs is a consistently high return on investment. In an industry with fine, fluctuating margins amongst PFAs, other factors are beginning to see more prominence.
There is growing concern about the handling and protection of personal data. This means that data protection is now the topmost of contributors’ minds when considering PFAs. The National Information Technology Development Agency (NITDA), which regulates all data handling organisations, published their list, “NDPR list of audit compliant organisations”, which mentions the companies that have met the conditions of their guidelines and regulation.
This guideline serves as the most definitive tool for identifying organisations with strong data protection protocols. Therefore contributors wary of their data safety will give preference to PFA’S on this list.
PFA’s that have a record of being able to identify high-quality assets and know-how to allocate funds to them, generate high returns.
Customer and advisory services have also been noted as a key component for contributors when deciding which PFA’s to opt for.
This is usually determined by personal pre-retirement and post-retirement advisors displaying excellent communication during consultation sessions, whilst working contributors through the process to attain long term financial security.
The top-performing organisations that display these factors are more likely to attract new contributors.
Veritas Glanvills Pensions, one of the biggest benefactors of this shift, saw remarkable growth in overall ROI across all of its retirement savings accounts.
Their inclusion on the NDPR list corroborates this performance and points to the new standard expected of PFAs.
This performance is based on return on interest across PFA retirement savings accounts (RSA 1 – RSA IV):
