290,000 Nigerians Use Transfer Window to Switch PFAs for Higher Returns
- Pension Fund Administrators (PFAs) have now entered a stiff competition for customers as more Nigerians switch PFAs
- These RSA holders are taking advantage of the pension transfer window to move to those that offer better packages
- The Pension administration sector has also recently attracted a lot of interest, especially after the rebased GDP included PFA activities
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
Steady competition is building in the pension industry, as customers are switching pension fund administrators in search of higher returns.
A report shows that almost 300,000 Retirement Savings Accounts (RSA) holders in Nigeria have switched their pension funds manager in the last five years.
Along with this switch, up to N1.26 trillion has been moved from one pension fund administrator to another within this period.
Source: Getty Images
The National Pension Commission (PenCom) has a scheduled pension transfer window that allows pension contributors to switch their fund managers if they find another that offers better terms and services.
This is in line with expert predictions that the rebased GDP will increase interest in the activities of Pension Funds Administrators in Nigeria.
290,000 pension contributors switch PFAs
According to data pooled from the National Pension Commission, the last five years have seen about 290,000 RSA holders move a total of N1.26 trillion from one administrator to the other.
The report also shows that the main motivation for such moves is the return rates on pension savings, BusinessDay reports.
With other pension fund administrators offering higher returns and more personalized customer service, PFAs are now forced to up their game or risk losing their customers during the transfer window.
One pension contributor, Mrs. Sophia Arinze, told Legit.ng that even though she had not switched PFAs so far, she would be glad to do that if she got a better offering.
Read also
Tariff Tsunami: How Tinubu’s government raised prices across telecoms, power, ports, others
She said;
“This is retirement funds we are talking about. If another PFA is offering higher returns and I hear about it, I would be happy to switch over. My current PFA sends me a statement of account every month, and I think that transparency is good too so that I can monitor the growth. Even if I change PFA for higher returns, I would want one that is still transparent like this”.
PenCom introduces pension transfer window
The Pension Reform Act of 2014 introduced the pension transfer window in a process called ‘portability’, as part of the Contributory Pension Scheme (CPS) but it did not take effect till November 2020.
Analysts at Crusader Sterling Pensions say this feature gets the pension contributors more actively involved to get the best managers for their funds; and they can move their funds from one PFA to another, without losing any money.
The burden is now on Pension Fund Administrators to prove to their customers that they offer the best returns and services, to keep them from switching.
They, however, have to provide the PenCom RSA requirements to the new PFA when making the switch.
PFAs invest more in FGN securities
In related news, Legit.ng reported that Pension fund administrators are taking advantage of the high interest rates by increasing investment in FG securities.
The investment from PFAs rose to N13.8 trillion in November 2024, marking an 18% increase year-on-year.
The investment assets include FG Bonds, Treasury Bills, Agency Bonds, SUKUK Bonds and Green Bonds which now offer higher yields than they used to.
PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!
Source: Legit.ng
