In anticipation of the formal launch of the Retirement Savings Account (RSA) transfer system, the National Pension Commission (PenCom) has published steps in which RSAs can be transferred from one Pension Fund Administrator (PFA) to another.
This is contained in a verified tweet by the commission, as seen by Nairametrics.
How To Transfer Your RSA pic.twitter.com/8eF1P4Ymc4
— Natl Pension Comm (@PenComNig) November 15, 2020
Recall that Nairametrics had earlier reported that PenCom had earlier fixed November 16, 2020 (tomorrow) as the date for the official launch of the RSA transfer system.
What you should know
The RSA transfer system involves five different steps which are succinctly explained below;
- Data recapture with the current PFA: You must ensure that your personal details have been recaptured and updated on the ECRS by your PFA (I.e. the PFA that currently manages your RSA).
Note: This applies if you opened your RSA before July 01, 2019 and have not been recaptured.
- Submission of RSA Transfer Request to Receiving PFA: You should approach the PFA that you intend to move your RSA to, (the Receiving PFA) and submit the transfer request by providing the following; Surname, RSA pin, E-mail and current phone number.
- Validation of Identity: You will be required to provide your fingerprint to the receiving PFA for the authentication of your identity on the National Identity Management Commission’s (NIMC) database. Thereafter, the receiving PFA will issue a printed confirmation slip, which should be signed by you as proof that your transfer has been submitted.
- Transfer of RSA and funds to receiving PFA: Your current PFA will transfer all the funds in your RSA to your new PFA at the end of the applicable transfer quarter. The process is closely monitored by PenCom
- Notification to RSA Holder: You will be notified by PenCom and the receiving PFA when your RSA has been transferred.
Before You Transfer: Best Pension Fund managers in Nigeria (2)
Pension fund managers based on the availability of information on the website, responsiveness to inquiries, and ease of navigation of the websites, among other factors.
In my last article on this, I did promise to continue the evaluation of pension fund managers with a view to providing RSA holders and investors with relevant information and data.
Here is the second part of that article.
Explore Financial Data on the Nairametrics Research Website
APT Pension Fund Administrators
This fund administrator has pricing information for the last 10 business days, meaning that if you are not a constant visitor to the site, you may miss some pricing information. Unfortunately, there is no historical price information available on the site. Pricing information for funds 1 and 3 are just getting published. Though the site publishes portfolio structure data showing what the funds invest in, there is no data on rates of return. The 2019 audited financial statement is available for download for all funds.
Trust Pension Fund Administrators
This administrator seems to be the most prompt in publishing daily prices on their website, however, only the last 10 business days information is usually available. Again, this calls for frequent visitation to the site if you intend to capture the historical prices. The good part though is that the fund manager has the prices for the last day of each month on the website. Portfolio information detailing what the funds invest in is available as well as quarterly rate of returns. In addition to notifying RSA holders of the N100 flat admin fee charge, Trust Pensions has a fee chat that details management fees being charged for each fund. That is transparency in fees.
NLPC Fund Administrators
NLPC reports the prices for all 5 funds for the last 7 business days. Again, this calls for frequent visits, at least weekly. Also available are the portfolio structure telling you what the funds invest in, approved rates of return, audited financial statements as well as chart of fees. The manager’s report is also available detailing each month’s performance for each fund.
Fidelity Pension Fund Administrators
Fidelity Pension Fund Administrators is one of the best in reporting pricing information for all 5 funds, as it has the historical data in an analysis friendly format. However, there does not seem to be information on portfolio structure, no fee information, although past audited financial statements could be found on the site.
Premium Pension Fund Administrators
Premium Pension Fund Administrators is another fund manager that publishes pricing information in a way that is amenable to analysis. The fund manager has information about the rate of return for the funds, but without dates, it is difficult to know what period the rate of return refers to. The only fee information available is the admin fee charge. There is also portfolio structure information detailing the asset allocation for each fund on a daily basis. Also available are past audited financial statements.
AXA Pension Fund Administrators
Following my earlier report on transparency in reporting, AXA pension fund now reports the pricing information of its pension funds in a beautifully laid out format that allows you to define a date range for the periods you need. Besides that, not much else is available on the sight as clicks on the return’s icon, and download icon came back empty or unresponsive.
VG Pension Fund Administrators
VG Pension Fund reports on all 5 funds (including micro pension fund) on their website. Also, on display is the rate of returns from 2017 as well as information on administrative fee charge. You can also see the portfolio structure information on what each fund invests in and in what percentage. Each fund’s current and past audited financial statements are also available for download from the site. Though there no return information, per se, the newsletters on the site show the year-to-date (YTD) return of each fund.
I will be releasing a final part of this piece as it is not possible to evaluate all the PFAs in one or two articles. So, be on the lookout.
President Buhari nominates Dr. Farouk Aminu as PenCom commissioner
Dr. Umaru Farouk Aminu has been nominated by President Buhari as a commissioner-elect in the National Pension Commission.
President Muhammad Buhari has nominated Dr. Umaru Farouk Aminu as a commissioner-elect representing the North-West zone of the country in the National Pension Commission (PenCom).
This is according to a press release on the website of Pension Nigeria, as seen by Nairametrics.
According to the disclosure, the appointment of Dr. Farouk was discussed at the Senate plenary session and subsequently forwarded to Committee on the establishment and public service matters for further legislative actions, which is to be reported back in two weeks.
What you should know
- Senator Yahaya Abdullahi moved the motion for the confirmation of the nomination of Dr. Farouk for appointment as full-time commissioner.
- Senator Abdullahi affirmed that the nomination is in tandem with the provisions of Section 19(3) of the Pension Reforms Act, 2014.
- In lieu of this, the request of the president C-in-C was referred to an ad-hoc committee for further hearing and considerations, with the mandate to report back in two weeks.
The pros and cons of Pension Fund Administrator transfer
Here, we highlight some of the advantages and disadvantages of transferring from one Pension Fund Administrator to another.
After my first article on the best pension fund managers in Nigeria, a few people have commented differently on the article.
In response to the comments, I have decided to do another article on the pros and cons of Pension Fund Administrator (PFA) transfer. Here are some of the advantages
The major reason for any investment is to make gains. Most investment gains are measured with investment performance. When a fund manager performs poorly relative to his or her peers and relative to the benchmark, he is due for a change. Therefore, an advantage of transferring from one PFA to another is that if the fund manager you transfer to has a history of consistently outperforming the peers and benchmark, you will benefit from the new fund manager’s higher performance.
Alignment with Risk Appetite
Each investor or RSA holder has his or her risk appetite and risk tolerance and different asset types or classes are suitable for different risk appetite. By looking through the portfolio structure of different PFAs, it is possible to know which PFA’s asset allocation best aligns with your risk appetite. Therefore, you get the advantage of aligning the PFA’s asset allocation to your risk appetite by transferring to the PFA whose asset allocation is in agreement to your risk make up.
Fund Manager Fee Management
Although the National Pension Commission, PenCom, has guidelines about the type of fees that fund managers should charge, there are slight disparities in fees charged by different PFAs. By reviewing the fee charts of different PFAs, you may be able to transfer to a PFA in such a way that you save on fees without sacrificing other beneficial services.
Experienced fund manager
It has been said that in fund management, asset allocation is everything. A fund’s performance depends so much on the asset allocation of the fund manager. Experience plays a big role in asset allocation. So, by transferring to a more experienced PFA, you stand the chance of benefiting from the experience of a fund manager through his asset allocation prowess.
There are also disadvantages from transferring from one PFA to another, below are some of them:
- Loss of Relationship: A disadvantage to switching from one PFA to another is that you may lose the relationship you have created or built with your old PFA and need some time to create that same relationship with the new PFA.
- Loss of market rally: When you switch PFAs, your old PFA has to transfer your account balance to the new PFA. Transferring from one PFA to another creates a gap in investment and you may miss any market rally that may occur during that gap. There is usually a cut off date for such transfers. So, if there is a market rally, by way of price increases within the gap period, you will miss out on that rally.
It is not mandatory that you transfer your RSA during a given transfer window, if you are happy with your current PFA’s performance, fees, etc, then stick with them, after all, past performance is not a guarantee for future performance and the devil you know, may be better than the angel you do not know.