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PFAs in stiff competition as workers scramble for higher returns, quality service

Why PFAs are not to mark their own performance report card

Pension Fund Administrators (PFAs) are in stiff competition to retain their current contributors and gain new ones who are taking advantage of the industry regulatory transfer window to search for better services.

In this vein, PFAs are now more worried about their returns on investment, as well as services rendered to Retirement Savings Account (RSA) holders, whose appetite for improved service delivery and higher returns are driving interest.

Recent data from the National Pension Commission (PenCom) at the end of 4th quarter 2023 shows that a total of 23, 484 RSAs were transferred between PFAs alongside the associated pension assets valued at N105.76 billion.

This covers RSA transfer requests submitted by PFAs from 1 September to 30 November 2023 that were due for transfer in the fourth quarter of 2023.

Pension Transfer Window introduced in 2020 by PenCom allows contributors otherwise called Retirement Savings Account (RSA) holders the flexibility to move their funds from one PFA to another at least once every two years.

Michael Oyebola in Money Counsellors 2023 Annual Report on Pensions with the theme: ‘Navigate your pension journey with confidence said the transfer window stands as a pivotal opportunity for RSA holders to reassess and optimise their retirement savings managed by their PFAs.

Data from PenCom, according Money Counsellor shows that from 2, 799 RSA holders who transferred to new PFAs in fourth quarter 2020 amounting to N18.90 billion, the figure rose to 12, 872 in fourth quarter 2021 with total amount of N42.49 billion, and 34,283 in fourth quarter 2022 amounting to N131.79 billion same fourth quarter 2022.

For the half-year period in 2023, a total of 34, 359 RSA holders transferred to new PFAs with total N158.60 billion exchanging hands among the PFAs.

Oyebola said this mechanism offers a pathway for RSA holders to respond to shifting market conditions as well as other measures used to evaluate and measure their current PFAs, ensuring that their investment aligns with long-term financial goals.

“The transfer window isn’t just a momentary shift but a dynamic tool that empowers RSA holders to make informed decisions based on the performance metrics of their PFAs. As the financial landscape evolves, embracing the transfer window becomes imperative for those seeking to capitalise on optimal fund management, superior returns, and a responsive approach to market changes.”

“In the ever-changing world of finance, the transfer window emerges as a beacon, guiding RSA holders towards empowerment, sustained growth and savings pot that will provide happy retirement.”

Oyebola said, if your PFA is constantly underperforming the average, then you might be at risk of having a lower retirement nest egg when the time comes to draw your pensions.

On the transfer process, he said, it can be seamless, but critical to the process is that you should have your PIN linked to your account and have completed your data recapture to ensure that your correct information is on the PenCom Enhanced Contributor Registration Scheme (ECRS)

Afolabi Folayan, executive director, Technical, Access Pensions said the onset of the transfer window aligns with the rights enshrined in the PRA 2014 and international standards, wherein customers are afforded the freedom to select a pension provider of their choice.

“We view this as a positive development for the industry, as it introduces an element of choice that is conducive to improved service standards and increased innovation among market participants.”

According to him, this shift is expected to drive greater adoption of digital channels as seek to provide customers with more comprehensive information regarding their retirement savings.