In this report, The Nation showcases the Pension Fund Administrators (PFAs) that are good, strong and reliable for employees or retirees under the Contributory Pension Scheme (CPS) who want to change their pension manager, Omobola Tolu-Kusimo reports.
It is four months since the National Pension Commission (PenCom) opened the transfer window for workers or retirees to migrate to. Many contributors under the Contributory Pension Scheme (CPS) have been excited over the opportunity to change their Pension Fund Administrators (PFAs).
The CPS requires pension funds to be managed by a PFA. The main functions of the PFA are to open Retirement Savings Account (RSA) for employees; invest and manage pension fund assets; payment of retirement benefits and accounting for transactions on the pension funds under their management.
For 17 years, employees and retirees under the scheme were restricted to one PFA of choice to manage their RSA. Part of the law that allows changes of PFA was only recently implemented by the regulatory authority, the PenCom.
Consequently, many were subjected to poor service as a result of low branch network that makes it difficult for contributors to reach PFAs, delay in pension payment, non-provision of monthly, quarterly or yearly statements while they engage in other issues not consistent with code of corporate governance and global practice.
Section 13 of the Pension Reform Act (PRA) 2014 specifies that a RSA holder may transfer his account from one PFA to another. It, however, specifies that such a transfer should not be more than once yearly.
According to the PenCom guidelines on RSA transfers, the period for transfers shall be carried out quarterly. This includes January 1 to March 31 for the First Transfer Quarter; April 1 to June 30 for the Second; July 1 to September 30 for the Third Quarter; and October 1 to December 31 for the Fourth.
The Nation has been investigating the PFAs to showcase good, strong and reliable ones to contributors under the scheme to consider if they want to change their pension manager.
The newspaper found Stanbic IBTC Pension Managers, ARM Pension and AIICO Pension worthy of highlighting as strong PFAs to move your pension accounts to.
They are accessible with branches across the country, provide monthly, quarterly and yearly contributions for RSA holders and give them support.
Most importantly, they have delivered excellent Return on Investment (RoI) on pension funds in their portfolio.
ARM Pension, acording to findings, has since inception ensured that its RSA Fund II and the Retiree Fund have delivered positive returns with no negative or down years, navigating major market dislocations like the 2008 financial crises and preserving capital in the process.
On the part of Stanbic IBTC Pension, it’s rich heritage as a member of the Standard Bank Group, which is the largest bank in Africa, with a 155-year expertise and track record of excellence has made it stand out.
AIICO Pension prides itself in its customer centricity and ability to offer competitive returns on investments in tandem with its vision to be the most efficient customer-centric PFA.
PFAs guided by corporate
governance
The PFAs have guided themselves with good corporate governance and have set principles based on best practices.
According to the chief executive officers of the companies, their structures and processes for achieving optimal governance practices are in line with the PenCom guidelines on corporate governance.
They said they have been meeting their governance responsibilities and driving greater corporate accountability.
Information Technology
The Managing Director, ARM Pension, Mr. Wale Odutola, said pension processes require transactions and data to flow between the commission, PFAs and Pension Fund Custodians (PFCs).
He said: “The key issues to be considered for efficient information flow and effective system inter-operability among the scheme’s stakeholders based on the commission’s guidelines are system management, hardware and servers, auxiliary devices, communication, collection/remittance, disaster recovery, security features and call centre systems.
“We have a well-equipped call centre to take care of contributors’ enquiry and other stakeholders’ information needs,” he maintained.
The Managing Director, Stanbic IBTC Pension Managers, Mr. Olumide Oyetan, said information management is critical to any business’ success.
He stated that his company has put in place processes to effectively manage information such that account holders’fears are allayed.
“Information and data protection is one of the critical areas within the business that we pay attention to closely. We have a robust information security department that reviews the formation of policies, standards and frameworks in alignment with global best practice. We have in place technology and measures to safeguard client’s data and information by ensuring that the three pillars of information security which are confidentiality, integrity and availability are upheld always while processing or storing clients’ data.
“We have also enabled our staff and clients via various information security awareness sessions on how to identify and prevent phishing attacks. To further improve our information security management system, we have embarked on achieving a global standard certification on ISO/IEC27001:2013 which will provide additional comfort to our clients on information management,’’ he added.
Retirement Savings Account (RSA)
The Managing Director, AIICO Pension, Mr. Eguarekhide Longe, said his company has maintained records for each RSA and provided periodic statements and performance reports.
Books of Accounts
Speaking on books of accounts, records and reporting of accounts, Longe said his company has been developing accounting system that ensures interface with reporting requirements of the commission.
“We have maintained adequate and proper books of accounts and records which include records of contributions, income, expenditure, assets, liabilities, investments and returns on investments made from pension funds managed by the company.
“On a regular basis, we submit returns on our operations to the commission in line with the ‘Formats and Manual of Instruction for Financial Reports of Pension Fund Administrators’ prescribed by the commission,” he added.
PenCom’s call for caution
PenCom’s Director-General, Mrs. Aisha Dahir-Umar said the transfer from one PFA to another is about enhancing the choices of account covers, but it’s very important to note that the choice comes with responsibility which requires due diligence on the path of the RSA.
“The transfer of RSA from one PFA to another is a right of every contributor, which has been empowered by Section 13 of the Pension Reform Act 2014. The section allows every pension contributor to move his account once in every year from one operator to another, if he so desires. The activation of the transfer system is a major milestone achieved by the commission considering that it has been on the drawing board from the inception of the pension reform in 2004.
“The reason the transfer system is just being activated 16 years into the pension reform is informed by the commission’s desire to ensure that the transfer process is secured by a robust contributor registration system. Thankfully, this has been achieved by the commission through in-house effort which developed and deployed the Enhanced Contributor Registration System (ECRS).
“Accordingly, and to protect the RSA holders and enhance their ability to make informed choices, the commission has provided statistics on the pension industry performance on its website. On the website also, that is, the PenCom website, a special section has been created to sufficiently guide RSA holders wishing to move their account from one operator to another. This section provides the information they will require to help them make informed choices.”
In addition, she said the commission has expounded its minimum disclosure requirement also meant to enhance the high-level transparency required for effective operation on the transfer system.
She stressed that the activation of the transfer system is expected to result in improved service delivery in the industry.
She, therefore, urges RSA holders to support the industry by basing their decisions to transfer their account on informed and objective considerations.
