IN the words of Hajiya Aisha Dahir-Umar, Director General of the National Pension Commission (PenCom), it was a major milestone when on Monday, 16th November 2020; the organisation virtually launched the Retirement Savings Account (RSA) Transfer System (RTS) in Abuja.
The launch officially opened the window that will enable RSA holders to switch from one Pension Fund Administrator to another once in a year if they are not satisfied with services in a previous PFA.
In her welcome address, the Director General, who pointed out that the scheme is backed by Section 13 of the Pension Reform Act (PRA) 2014, stated that PenCom was unable to embark on the full implementation of the transfer policy earlier due to challenges hitherto experienced in its contributor registration system. The challenges, which she said have now been overcome, were largely hinged on technology, given that in the early days of the pension reform, contributor registration did not include the biometrics component.
While emphasising that the transfer of RSA from one PFA to another by RSA holders is all about enhancing individual choices, the Director General also stressed that due diligence is required. In order to achieve this by assisting RSA holders’ ability to make informed choices, PenCom expanded its minimum disclosure requirements by providing more statistics on pension industry performance.
PenCom, she argued, in its renewed commitment towards taking the pension industry to greater heights, undertook an in-house development of some computer Applications that were required to activate the RSA transfer window. A critical component of the application was development and deployment of the Enhanced Contributor Registration System (ECRS) in June 2019. The ECRS enables a smooth and flawless identification of contributors registered on PenCom’s database, a critical requirement for smooth RSA transfers.
Following the development and deployment of ECRS, said Hajiya Aisha Dahir-Umar, was the development of the RSA Transfer Application also known as RTS. This Application, described as a unique and robust electronic platform, enables seamless RSA transfers utilised for the submission, processing and monitoring of RSA transfer requests. Another important feature of the RTS is that it enables the initiation of an RSA transfer request by an RSA holder in simple steps, while having the capability to conduct other processes in a timely and efficient manner.
Before the official launch on Monday, the Commission had conducted training workshops for Pension Fund Operators while an industry simulation exercise was carried out, in order to ensure that the RTS functions efficiently, as designed.
While emphasising that the transfer of RSA from one PFA to another by RSA holders is all about enhancing individual choices, the Director General also stressed that due diligence is required. In order to achieve this by assisting RSA holders’ ability to make informed choices, PenCom expanded its minimum disclosure requirements by providing more statistics on pension industry performance.
All RSA holders who are still in active employment, retirees on programmed withdrawal, and retirees on annuity who are making voluntary contributions into their RSAs, are eligible to transfer their RSAs.
According to her, a special section has been created on the PenCom’s website, containing relevant information on the RSA transfer, to guide RSA holders. In addition, PenCom has also developed the minimum information disclosure requirements to enhance the high level of transparency required for the effective operation of the RSA Transfer System to be adopted by all PFAs.
The activation of the RSA transfer window, she said, is expected to result in improved service delivery across the pension industry, as PFAs engage in healthy competition, by providing improved service offerings for the benefit of RSA holders.
In preparation for heightened competitive activities between the PFAs, she revealed, PenCom has strengthened the Code of Ethics and Business Practices for Licensed Pension Operators to ensure the sustenance of the high ethical standards the pension industry has established over the years. She urged all RSA holders to continue supporting the pension industry in maintaining these ethical standards by basing their decision to transfer their RSA solely on objective considerations.
Good will messages
The measure of the excitement welcoming the opening of the transfer window is gauged from the goodwill will messages from the various stakeholders in the pension industry.
For Comrade Ayuba Wabba, mni, President of Nigeria Labour Congress, labour remains the most critical stakeholder in the Contributory Pension Scheme (CPS) as workers and pensioners are the owners of RSAs. As a result, they are glad about the launch of the transfer scheme and look forward to policies that will enhance the efficiency in the pension industry.
The President of Pension Operators Association (PenOp), Mr M. K. Ahmad, was not left out in the excitement. In his good will message, Mr Ahmad who is the pioneer Director General of PenCom said the main essence of the 2004 Pension Reform, which instituted the CPS in Nigeria, is to establish an effective and sustainable pension system.
According to him, some of the main building blocks of the CPS include the private sector management of pension funds by licensed operators and the right of RSA holders to select and change PFAs. Hence, the opening of the transfer window is a momentous development in the pension industry. He said the milestones attained since the 2004 Pension Reform are majorly attributable to the emphasis on transparency.
He stressed that the expectation is that the launch of the transfer window will increase RSA holders’ confidence in the CPS through improved service delivery within the pension industry. He urged all RSA holders to ensure that decisions to move from one PFA to another are based on an objective review of information available on the performance of the PFAs. He therefore called on PenCom to therefore continue its ongoing extensive enlightenment campaign aimed at educating RSA holders just as he urged PFAs to maintain a high degree of professionalism and innovation on service delivery to contributors and retirees.
In preparation for heightened competitive activities between the PFAs, she revealed, PenCom has strengthened the Code of Ethics and Business Practices for Licensed Pension Operators to ensure the sustenance of the high ethical standards the pension industry has established over the years. She urged all RSA holders to continue supporting the pension industry in maintaining these ethical standards by basing their decision to transfer their RSA solely on objective considerations.
Over view of the RSA Transfer System
Mrs Grace Usoro, Head, National Databank Management Department of PenCom, gave an overview of the RSA Transfer System, with emphasis on the following:
Eligibility and Frequency of RSA Transfers
All RSA holders who are still in active employment, retirees on programmed withdrawal, and retirees on annuity who are making voluntary contributions into their RSAs, are eligible to transfer their RSAs.
However, the basic prerequisite for eligibility in all cases is that RSA holders must have been registered on the Enhanced Contributor Registration System (ECRS).
The provision of Section 13 of PRA 2014 limits the frequency of RSA transfers to once in 12 calendar months or 365 days. The RTS, has been configured to check this and to reject any request that falls short of this criterion.
The RSA Transfer Process
The following are things that RSA holders need to know about the RSA Transfer Process:
- The first thing an RSA holder should note is that he/she needs to approach a PFA of his/her choice to initiate an RSA transfer. It is important for the RSA holder to make an informed choice regarding which PFA to move his or her RSA to. Consequently, information on all PFAs that would assist RSA holders in making this choice will be hosted both on PenCom’s website and on the websites of all the PFAs. The Commission will also continuously explore other media to disseminate such information for the benefit of RSA holders.
- Next, it is important to note that the RSA transfer system has been designed in such a way that an RSA holder does not require the input of his or her current PFA to initiate an RSA transfer. This is however provided that the RSA holder has been registered on ECRS, or has been recaptured, if he/she registered before the 1st of July 2019.
- The process has also been designed to be hassle-free for the RSA holder, as information required for the initiation of an RSA transfer is very minimal.
- Furthermore, the system is designed to uphold effective communication with the RSA holder all through the process. The RSA holder will receive email updates from RTS whenever key changes occur in the process and when the RSA transfer has been concluded.
- It is important to note that RSA transfers will be carried out on a quarterly basis, although transfer requests can be initiated by RSA holders at any time. Consequently, the RSA Transfer System will have only four possible Effective Transfer Dates, and these dates are: 31st March, 30th June, 30th September and 31st December, of any given year. These dates are fixed, regardless of whether they fall on weekends or public holidays.
- For better administration, RSA Transfer requests received in the first two months of any Transfer Quarter will be processed in that quarter, while those received in the third month of the Quarter will be processed in the following quarter.
- Another key feature of the RTS is that the transfer of pension assets will be closely monitored by PenCom to ensure that the RSA holder does not loose income as a result of his/her decision to transfer his/her RSA.
- To this end, the RSA holder has a right to request for a review by PenCom if he/she has a genuine reason to be dissatisfied with the RSA balance transferred to his/her new PFA.
- Finally, it is important to note that the RSA holder needs to inform his/her employer of the RSA transfer in order to ensure that the remittance of his/her monthly contributions is not truncated.
The RTS is indeed a system that has been designed with the contributor in mind! PenCom has already issued regulations that would govern the entire process to ensure equity, fair play and transparency in the RSA Transfer process.
Conclusion
The activation of the RSA transfer is expected to result in improved service delivery across the pension industry, as PFAs will engage in healthy competition, by providing improved service for the benefit of RSA holders.
RSA holders should note that while the transfer of RSA from one PFA to another by RSA holders is all about enhancing individual choices, due diligence is required. They should ensure that their decision to switch from one PFA to another is based on an objective review of the information available on the performance of the PFAs. PenCom and other stakeholders are convinced that we all have better days ahead of us in the pension industry.
