Pension Fund Administrators (PFAs) in desperation to retain their existing contributors are doing all within their powers to enhance service delivery and returns on the funds.
This is following the pressure created by the recent opening of pension transfer system by the National Pension Commission (PENCOM), which gives Retirement Savings Account (RSA) holders the right to change their existing PFA for another if they desire.
The transfer window is a platform created by the PENCOM to enable pension contributors who are dissatisfied with the services of their current PFAs transfer their RSA to any Pension Fund Administrator of their choice.
As at the end of December 2020, a total of 2,799 RSA holders have initiated the transfer of their RSAs from their existing pension PFAs to other PFAs. This is during the maiden RSA Transfer Quarter.
According to PENCOM, total value of the RSA balances transferred stood at N18.9 billion, and all the 22 PFAs were involved in the transfer, as transferring and/or receiving PFAs.
Before the commencement of the transfer system on November 16, 2020, it was not the practice for most PFAs to let their contributors see their performance records.
But with the transfer window now, PFAs that are doing well have no choice but to showcase their qualities that make them stand out among their peers.
Read Also: Pension Transfer Window is open but not all PFAs are good for you
This is not only positively enhancing benefits accruable to RSA holders, but also increasing understanding of their knowledge on how their pension funds are managed from time to time.
Service delivery has also seen a lot of improvements, as PFAs have increased communication with their respective RSA holders through so many channels, including social media.
But what has become interesting is where the pendulum of leadership is moving to. Competition, no doubt, is setting in and over time it will become clearer where RSA holders are transferring to, whether it is to bigger PFAs or small- size PFAs.
A small revelation is already coming from the last quarter 2020 report of the PENCOM, which revealed that smaller PFAs are pulling some weight in terms of new entrants, but whether it is as a result of the transfer or new registrations, it will become clearer over time.
As at Q4 2020, the ranking of PFAs by number of registered contributors showed a marginal growth in the market share of the bottom three PFAs from 1.45 percent in Q3 2020 to 1.50 percent in Q4 2020.
Similarly, the bottom five PFAs recorded slight increase in the number of registered RSAs from 3.96 percent in Q3 2020 to 4.10 percent in Q4, 2020, just as the bottom 10 PFAs recorded a marginal increase from 15.02 percent in Q3 2020 to 15.20 percent in Q4 2020.
The market share of the top three marginally increased from 37.39 percent in Q3 2020 to 37.40 percent in Q4 2020, while the market share of the top 10 PFAs marginally declined from 78.44 percent in Q3 2020 to 78.40 percent in Q4 2020. The market share of the top five PFAs also marginally declined from 53.27 percent in Q3 2020 to 53.20 percent in Q4 2020.
A further breakdown of the cumulative PFA registrations revealed that 15 PFAs had registered less than 500,000 RSAs each, while the remaining seven PFAs had registered more than 500,000 RSAs each as at the end of the Q4 2020.
Wale Odutola, managing director/CEO, ARM Pensions, providing answers to some of the concerns of RSA holders, for instance, on what distinguishes a PFA from the other, and what should influence choice and movements, said, “Key differentiating elements are likely to influence choice of one PFA to the other.”
According to Odutola, these elements become the competitive qualities that PFAs are going to work on, which bring additional value to the RSA holder and for the larger pension industry.
“For every RSA holder planning to make a move, I’ll advise that such a person seeks out a PFA with an excellent management team, a good investment track-record and notable years of experience.
“RSA holders should not ignore history books. Ensure that the PFA you move to have rigorously managed pension fund assets and remained consistent with paying out higher returns to the retirees whose fund they manage,” he said.
Every word from Odutola is laced with concern for the RSA holders who he hopes will make the right choice of PFA.
As at the end of December 2020, the contributory pension scheme has registered 9.22 million contributors with total pension funds under management standing at N12.31 trillion.
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