Still on pension transfer window…

Georgina, a 45 year old employee at a Telecommunication Company in Lagos is not happy with the level of service she gets from her Pension Fund Administrator (PFA) since having been with the PFA over the last 11 years. What discourages her most is the level of returns on investment she get’s, compared to what her other colleagues get from their respective PFAs. When ask what she wants to do, her response is always “I want to port”. Georgina like many other Retirement Savings Account (RSA) holders want the Transfer Window open today so that they can move to PFAs of their choice.

Experts at Investment One Pension Managers Limited described the transfer windowas a platform created by PenCom to enable pension contributors who are dissatisfied with the services of their current Pension Fund Administrators (PFAs) transfer their retirement savings account (RSA) to any Pension Fund Administrator of their choice.

The mention of the transfer window raises heated arguments at meetings of Pension Fund Administrators. The reason is not far- fetched; they are going to be most affected by the window of change. The transfer window is an avenue for PFAs to increase their industry market share in terms of RSA size or size in the Fund under management (FUM) or lose same to competitors depending on how they play their card.

From industry grapevine; many PFAs are earnestly awaiting the opening of the transfer window rather than wishing it away. The open transfer window affords them the opportunity to showcase their competitive advantage including the quality of customer service, I.T. Infrastructure, staff etc. These they believe will enable them acquire a larger share of the market.

The transfer window promises to be an exciting happening within the industry as PFAs are set toslug it out with each other in a competitive market to retain old contributors and as much as possible win new ones. However one question on everybody’s mind is” when will the transfer window be opened”? A lot of experts in the industry have made predictions with dates, however these predictions have proved wrong.

Therefore the pertinent question is will the transfer window ever materialize? Will the window be opened this year 2017 or in 2018?This is jumbo question in the minds of stakeholders in the industry.

PenCom has said that the transfer window is a reality for those who have doubts; however the timing, will most definitely depend on how fast the factors delaying it are resolved and these factors includes but are not limited to:

1) The Issues of double registration

2) The I.T. infrastructure requirements

Double or Multiple Registrations:

Double or multiple registration occurs when a prospective contributor registers with two or more PFAs and in the process is given different PIN numbers. . This is a regular occurrence in the market place. Marketers are known to do this sometimes, i.e. going ahead to register an individual who informs them of registration and PIN receipt by another PFA. They do this probably to try and meet the RSA target or for fear of losing their jobs or in retaliation. The immediate impact of this is that it does not allow the prospect to have a consolidated pension remittance because while a certain part of his remittance goes to one PFA another part goes to a different PFA. At the point of retirement, the retiree has to write to PenCom for consolidation and the Commission will mandate the PFAs involved. Sometimes one PFA is instructed to remit the retirees contribution to the PFA with the first Pin (First pin rule). This is a big problem as all these end up delaying the benefit payment process. PenComis trying to put infrastructures and modalities in place for the data base cleanupthereby eliminating the incidences of double registration. This will facilitate the opening of the transfer window once completed. However until this is completed the window is not likely to be opened.

I.T. Infrastructure

Preparation for the transfer window will also involve huge capital investment in Information technology such as

1) Automated Finger prints capturing equipment(AFPC)

2) Automated document management system

Pension Fund administrators are expected to deploy automated finger prints capturing (AFPC) equipment for the recapturing of the biometrics of every contributor on their data base. At the moment there are provisions for only two finger biometrics on the retirement savings account registration forms but, AFPC equipment will enable ten fingers to be captured. It is reported that many PFAs have gradually commenced this exercise however the exercise will require ample time to complete and its success will also determine the takeoff of the transfer window. This brings us to the same question; will this exercise be completed this year or next year?

Automated Document Management System will enable transfer of an RSA holders documents between PFAs and the RSA transfer clearing system.

From the above we can deduce that the transfer window is a reality but will require a complete cleansing system which will in turn be dependent on the deployment of Information technology systems both from the side of the National Pension Commission and the Pension Fund Administrators. This whole process will definitely require sufficient time and which cannot be predicted accurately. In conclusion the Pension Fund Administrators should assiduously prepare for the coming window, so they are ready when it finally opens.