RSA transfer window: Enhancing informed choices, robust competition

Joseph Inokotong, Abuja

The recent launch of the Retirement Savings Account (RSA) Transfer System by the National Pension Commission (PenCom) has empowered retirees participating in contributory pension scheme to heave a sigh of relief with the multiple choices availabe to them.

The activation of the RSA transfer window allows either a pension contributor or retiree to move his or her RSA from one Pension Fund Administrator (PFA) to another, provided they adhere to the pre-condition of doing so not more than once in a year. Undoubtedly, the development is expected to create improved service delivery across the pension industry, as PFAs engage in healthy competition, by providing improved service offerings for the benefit of RSA holders.

As participants in the scheme bask in the euphoria of now being in a position to transfer their RSA from one PFA to another, it should be noted that aside conferring on them the authority to decide who manages their funds, it is also, all about enhancing individual choices. It is pertinent to emphasise that some due diligence is required.

In this regard, PenCom, in order to facilitate RSA holders’ ability to make informed choices, said it has expanded its minimum disclosure requirements, by providing more statistics on pension industry performance. Already, a special section has been created on the Commission’s website, containing relevant information on the RSA transfer to guide contributors.

The Commission has also developed the minimum information disclosure requirements to enhance the high level of transparency required for the effective operation of the RSA transfer system, to be adopted by all PFAs. It added that it has also commenced a public enlightenment campaign in order to ensure that all stakeholders are fully conversant with the operations of this novel initiative.

However, due to the envisaged competitive activities, some bottlenecks are likely to emerge, and if not nipped early in the bud could pose a serious threat to the system thereby defeating the essence for which it was set up.

Aisha Dahir-Umar, the Director General of PenCom had in response to this development assured that the Commission has consolidated its Code of Ethics and Business Practices for Licensed Pension Operators, to ensure the sustenance of the high ethical standards the pension industry has established over the years. She urged all RSA holders to continue supporting the pension industry in maintaining these ethical standards by basing their decision to transfer their RSA solely on objective considerations.

Commenting on the robustness, integrity and security of the system, especially in an information age where cybercrime was becoming rampant, Dahir-Umar said the management was doing all that it can to ensure the integrity of the system remains intact.

She admitted that the Commission was unable to embark on full implementation of the RSA transfer policy due to challenges hitherto experienced in its contributor registration system. These challenges, she explained were largely hinged on technology, given that in the early days of the pension reform, contributor registration did not include a biometrics component.

However, she pointed out that the Commission 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”, she explained.

She said 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”.

Corroborating her view, the Head, National Databank Management, National Pension Commission, Mrs. Grace Usoro, said RSA Transfer System, otherwise known as the RTS was developed in-house and that singular act saved huge financial outlay for the Commission, and culminated in human capital development.

“As a precursor to opening of the RSA transfer window, PenCom embarked on the development of requisite IT Applications, using in-house resources, and through this approach; it has enjoyed significant financial savings and also expanded the technical capacity of its human capital.”

According to Usoro, “the ECRS has enabled the unique identification of contributors registered on the Commission’s database, which is a critical requirement for RSA transfers.

“The ECRS has been configured to mandatorily require the provision of the National Identity Number (NIN) of every person presented for registration, and has therefore aligned the contributors’ database with standards specified by the National Identity Management Commission (NIMC), for data generating agencies in Nigeria.  The ECRS is interfaced with the National Identity database at NIMC, for the purpose of carrying out seamless verification of the identity of every new entrant into the CPS”.

She added that “Having addressed the fundamental concerns on the integrity of its database by the successful deployment of the ECRS, PenCom embarked on the development of the RTS.  The RTS is to provide a platform for seamless RSA transfers, right from the submission of an RSA transfer request by the RSA holder, up to the transfer of pension assets by the Transferring PFA to the Receiving PFA.

“It is indeed a robust application that interfaces with the databases of all PFAs to enable three key regulatory objectives: firstly, to allow the initiation and processing of RSA transfer requests; secondly, to allow regulatory surveillance; and thirdly, to allow the seamless imposition of sanctions for non-compliance by PFAs.  Indeed, a cardinal feature of this new system is that every transaction will be monitored by PenCom on an online, real-time basis.”

As regards eligibility and the frequency of RSA transfers, PenCom said “all RSA holders who are still in active employment, retirees on programmed withdrawal, and retirees on annuity who are making voluntary contributions into their RSAs are eligible to transfer their RSAs”. However, it re-emphasised that a prerequisite for eligibility in all cases, is that “the RSA holder must have been registered on the ECRS”.

The provision of Section 13 of the Pension Reform Act 2014, limits the frequency of RSA transfers to once in 12 calendar months or 365 days.  The RTS therefore, has been configured to check this and to reject any request that falls short of this criterion.

“RSA transfers will be carried out on a quarterly basis, although transfer requests can be initiated by RSA holders at any time.  Consequently, the RST will have only four possible effective transfer dates and these dates are: 31st March, June 30th , September 30th and December 31st, of any given year.  These dates are fixed, regardless of whether they fall on weekends or public holidays.

“For better administration, RSA transfer requests received in the first two months of any transfer quarter will be processed in that quarter, while those received in the third month of the Quarter will be processed in the following quarter,” said Usoro.