Assessing impact of Retirement Savings Account transfer system on Nigerians


By Nana Musa

For decades, pension and other social benefit matters have received significant attention in many countries.

A lot of reforms and decisions are being taken to address the challenges associated with the existing pensions leading to changes in the ways pension assets and benefits were managed and distributed to the target groups, especially retirees and ‘senior citizens’.

In Nigeria, it has been a staggered history of pension since 1951, through the public sector pension scheme, the establishment of National Provident Fund (NPF) of 1961, the Pension Decrees nos.102 and 103 of 1979 and the National Social Insurance Trust Fund (NSITF) Decree no.73 of 1993.

However, many retirees in Nigeria still go through unnecessary difficulties before accessing retirement benefits or their monthly entitlements due largely to the management or administration of the funds they have contributed over their years of service.

In order to address the challenges, the National Pension Commission (PenCom), has initiated a lot of reforms including the Retirement Savings Account (RSA) transfer system, in line with the provision of Section 13 of the Pension Reform Act 2014 on Nov. 16.

The Director General of PenCom, Hajiya Aisha Dahir-Umar, while launching the transfer system, said it would allow the RSA holders to transfer their accounts from one Pension Fund Administrator (PFA) to another once in a year.

The RSA Transfer System (RTS) is a unique and robust electronic platform that would enable seamless retirement savings account transfer, the RTS platform was to be utilised for the submission, processing and monitoring of retirement savings transfer requests.

RTS would 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.

The Head ICT at PenCom, Mr Polycarp Anyanwu, said over 2,100 persons have applied to switch their pension operators, this was disclosed this at the 2020 Pension Fund Operators Association of Nigeria (PenOp) Media Retreat for journalists held virtually.

He said the applications were submitted and received by the Commission between Nov. 16 and Nov. 30, 2020.

Most of the pension contributors seeking a switch to a new PFAs were those who were not contented with the service delivery of their current pension fund handlers.

Anyanwu said this development would no doubt, enhance quality service delivery of the PFAs to their clients.

This development has been commended by many stakeholders and pensioners who believed that it will help in addressing the undeserved stress pensioners were been subjected to after they had rendered many years of service to their nation.

Many pensioners in an interview with the News Agency of Nigeria (NAN) expressed their happiness with the development, saying it has given them the opportunity not to be stuck with one PFA as well as have their proper account details.

A retired pensioner, Mr Ezeorah Umeh, said part of the problems they faced was implementing the pension reform act of 2014, which covered a lot that could help to address the challenges in the sector.

“Most RSA are not happy with their PFA but they have no choice than to be stuck there, the PFA need to have competition for them to do better.”

Umeh said that PenCom was gradually implementing all the reforms, expressing confidence that in no distant time there would be no problem facing the commission.

Mr Udo Bassey, a pension expert, said that the country’s pension funds should not be borrowed but invested in line with the investment regulations issued by the National Pension Commission.

“The investment regulations allow pension funds to be invested in asset classes such as Bonds, Sukuk, Treasury Bills, Global Depository Notes and other securities issued by the Federal Government of Nigeria, provided that the securities are guaranteed by the Federal Government of Nigeria.

“The investable assets also include Bonds and Sukuk issued by eligible State and Local Governments provided that such securities are fully guaranteed by Irrevocable Standing Payment Orders (ISPOs).

“This is subject to the fulfilment of the conditions set out in the Commission’s Circular on “Minimum Requirements for the inclusion of State Bonds as Investible Instruments in the Pension Industry,” Bassey said .

He said that major achievements of the Pension Reform was the establishment of robust legal and institutional frameworks for the administration of pensions in Nigeria.

Also, the legal safeguards and institutional checks and balances, the commission as the regulator of all pension matters in Nigeria, has entrenched good corporate governance practices, high ethical standards instituted through rigorous supervision and regulation of the industry.

PenCom had deemed it necessary to prescribe that pension funds may be invested only in the Bonds floated by states that have fully complied with the Contributory Pension Scheme.

Bassey said that this however does not guarantee pension funds investing in the state bonds, as fund administrators are required to conduct several risk analyses to decide if investing in such bonds meets expected yields and risk appetite.

Also, Fund Administrators may wish not to subscribe to a state bond.

Observers believed that with effective implementation of this and other reforms by PenCom Nigeria pension sector would in no distance time witness commendable status that would make senior citizens to retire to enjoy their well deserved retirement benefits.

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