RSA TRANSFER SCHEME GOES INTO OPERATION THIS YEAR - PENCOM

The Director-General of National Pension Commission (PenCom), Mr. Muhammad Ahmad, has said that the Retirement Savings Account (RSA) transfer mechanism, which the commission has been perfecting, would be made operational this year. He stated that the framework is currently being reviewed by the industry experts.

He said this would enable Retirement Savings Account (RSA) holders to move their accumulated savings from one Pension Fund Administrator (PFA) to another with a view to securing their life savings or shoring up returns on such accumulated funds.

According to him, the new development is in tandem with provisions of Section 11 (2) of the Pension Reform Act, 2004, which states that an employee may transfer his RSA from one PFA to another without adducing any reason for such transfer not more than once a year.

Ahmad said the provision was intended to facilitate full and equitable pension assets portability within the pensions industry as well as to enhance healthy competition amongst the PFAs.

The regulator for retirement savings management arm of Nigeria's finance industry, PenCom boss confirmed that the pension transfer window would be opened this year. However, the boss regretted that seven years after the contributory pension was introduced in the country, this section of the law has not been implemented.

'Having drafted the regulations for the transfer of RSA from one PFA to another PFA, the commission said it is trying to put in place the required structure to ensure that the desired objectives are achieved. To ensure smooth transfer of pension assets by contributors, the commission established the Transfer Clearing System (TCS) which shall serve as a control where transfers of RSAs are processed, reconciled and monitored,' he said.

He stated that the operations of the TCS shall be based on electronically driven infrastructure and the TCS should have an interface with all PFAs and Pension Fund Custodians (PFCs) to facilitate transfers between the PFAs. He also added that the plan to open transfer window this year was in furtherance with PenCom's plan to consolidate on its past achievements in the implementation of pension reform in the country.

To provide RSA holders with choices of investments, PenCom also hinted that a Multiple Fund structure would be introduced by the end of the second quarter of next year subject to specific guidelines. Going forward he noted that additional disclosure requirements would be required of operators to promote further transparency and accountability in the industry.

The PenCom boss also informed that the Risk Management and Analysis System which is the core supervisory application would be finalised in 2012 to greatly improve the efficiency and effectiveness of the Commission.