By Omobola Tolu-Kusimo
The opening of transfer window to workers and retirees by the National Pension Commission (PenCom) will ensure an efficient and sustainable pension system in Nigeria, the pioneer Director-General of the National Pension Commission (PenCom), Mr Mohammed Ahmad, has said.
Ahmad in a goodwill message during the luncheon of the Retirement Savings Account Transfer System (RTS) two days ago by the National Pension Commission (PenCom), said the Pension Reform Act (PRA) 2004 has since provided that Retirement Saving Account (RSA) holders have an opportunity to transfer their RSA from one PFA to another once in a year but it didn’t happen until now.
The essence of the transfer window essentially, he said, is to ensure an effective and sustainable pension system in Nigeria.
He noted that some of the building blocks in addition to having a transfer window is that the scheme that is directly being managed by the private sector.
He commended PenCom for sustaining the basic principles of the pension reform.
He urged workers and retirees who will be willing to change their PFAS to ensure that their decision to move is based on an objective review of the information available on a PFA.
He said: “As you are aware, the PRA since 2004 has provided that RSA holders have an opportunity to transfer their RSA from one PFA to another once in a year. For Retirement account holders, I would like to ask them to ensure that their decision to move from one PFA to another is based on an objective review of the information available to them. I know that PenCom and licence operators have continuously provided information to RSA holders. With this reform and this event, I hope that there will be more information available as it allows RSA holders to take a decision. Of course, the details of the transfer window I believe will be explained by the commission. It’s not the decision that is light and it’s not a decision that should be taken lightly. I believe that it is a decision that should be based on if there is need for anyone to change his or her PFA.
“For the operators, this is also another unique opportunity to improve on their services and what they can offer. Competing for market share comes with its own challenges. When you are competing, there is the tendency that certain standard professionalism may be undermined. I hope that given the fact that PFAs do have an association that is a Self-Regulatory Organisation (SRO) is a privilege that comes with its own responsibilities. I appeal that professionalism, ethical standards should be the watch word.
“We will continue to appeal to our operators to ensure that we have a very transparent and clearly defined roles. Although PenCom is there to impose sanctions on unethical practices, but the best regulation is a self-regulation and I hope that operator’s world self-regulates themselves to improve on the performance of the industry. This is a journey that has started. This is not an event, this is a process and a process must be built on clearly defined rules and regulations, systems, as well as ethics. We are also reinforcing our culture as an industry and to evolve a culture is not something you can do overnight. I hope those of us who have opportunity to manage the various institutions in the industry will continue on that culture so that we have a more sustainable, enduring pension industry.”
He continued: “I want to congratulate the commission, PFA as well as the entire participants in the industry for this occasion and for the commitment to ensure that having taken this long, we are ready to allow this to happen and we are ready that as an industry, we are transparent all the time. I hope that there won’t be challenges but like we said when we started this industry, we never knew we were going to come this long but we are determined, focused and we should continue with that spirit.
“Let us always remember that we are dealing with people’s life savings which means a lot. These are savings of individuals who might have retired and need to have access. Whatever we can do our steps and actions no matter how small will impact on the future of this industry.
“But I’m pleased to know that this will also provide a very strong competitive environment. In competition you don’t compete on price, but you compete to bake the cake. When you bake the cake, then you share the pie. This is what we should do. In other words, we should not just compete for the sake of market share but because we want the industry to expand and grow. As you are aware, we are still far away in terms of the numbers of those we are to cover, and we believe this is also another opportunity that will encourage Nigerians to join the Contributory Pension Scheme (CPS)”, he added.
NLC President Mr Ayuba Wabba also praised the Commission for its innovation especially for developing an app which allows a seamless transfer of pension from one PFA to another.
He added that this will no doubt engender competitiveness and it will bring about also effectiveness in pension administration and invariably will lead to service delivery.
“I believe this is the one concept of modern-day service delivery concept like we have in the banking sector where people choose which bank, they would put their money. Part of the consideration that workers will do is about returns on their investment.
“So, I think this a welcome development and I want to commend PenCom for coming up with this idea. I urge workers to participate in this opportunity and look at how best they can maximise the benefit that comes with this innovation”, he said.
President, Pension Fund Operators Association of Nigeria (PenOp), Mr Wale Odutola also describe the transfer window as a landmark achievement.
“Today clearly is a landmark day in the history of the pension industry. It is a day that has been set for all contributors within the industry to exercise their right to choose who they trust to manage their contributions from among the 22 pension operators in the country.
“For us as operators, this will definitely inspire us to improve our services. For our regulator, they can be rest assured that the industry is moving towards greater self-regulation by virtue of the potential for increased competition within the industry. The commission has worked tirelessly over the years to bring us to this day and we are happy.”
Odutola appealed to his fellow operators to see this period as very crucial to ensure that there is high level professionalism and ethics as we go into this next phase of the industry. We need to continue to keep the integrity of the industry and our profession as we go about prospecting for clients. The industry has come a long way from 2004 and we need to as operators and stakeholders, ensure that we strive to protect the legacy as we forge ahead under this new phase.
Meanwhile, the Director-General, PenCom, Aisha Dahir-Umar said: “Indeed, the activation of the RSA transfer provision is a major milestone attained by the commission in the implementation of the CPS, considering that it has been on the drawing board since the advent of the Pension Reform. It is noteworthy that the commission was unable to embark on the full implementation of the RSA transfer policy due to challenges hitherto experienced in its contributor registration system.
“These challenges were largely hinged on technology, given that in the early days of the pension reform, contributor registration did not include a biometrics component. However, the commission has renewed its commitment towards taking the pension industry to greater heights by undertaking the in-house development of some computer Applications that are required to enable the opening of the RSA transfer window. The commission therefore, developed and deployed the Enhanced Contributor Registration System (ECRS) in June 2019. The ECRS has enabled the unique identification of contributors registered on the commission’s database, which is a critical requirement for smooth RSA transfers. “This was followed by the development of the RSA Transfer Application. The RTS, as the Application is tagged, is a unique and robust electronic platform that will enable seamless Retirement Savings Account transfers. The RTS platform is to be utilised for the submission, processing and monitoring of Retirement Savings Account 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. The commission has also 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”, she added.
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