In a significant development, a record-breaking 101,820 Retirement Savings Account (RSA) holders opted to switch their Pension Fund Administrators (PFA) in 2023. This marks a notable increase of 10.2% compared to the 92,413 transfers recorded in the previous year, setting a new high for the industry.
During the review year, a substantial sum of N462 billion was transferred by RSA holders, demonstrating a substantial 28% increase from the N361.5 billion transferred in the preceding year. This brings the cumulative total since the inception of the transfer window to an impressive N1.14 trillion.
Since the reopening of the transfer window by the National Pension Commission (PenCom) in Q4 2020, a total of 245,625 RSA holders have made the decision to change their pension administrators. This transfer activity aligns with Section 13 of the Pension Reform Act (PRA) 2024, allowing RSA holders to transfer their accounts from one PFA to another. The move aims to enhance efficiency in the industry by fostering increased competition among administrators. The industry’s growth has also been influenced by the recapitalization of PFAs from N1 billion to N5 billion, leading to a series of mergers and acquisitions.
The pension industry has witnessed substantial growth in recent years, with RSA registrations surpassing 950,000 in the last three years alone, reaching a record high of 10.16 million people. Concurrently, total pension assets soared to a new peak of N17.93 trillion as of November 2023, reflecting a 1.5% increase from the previous month. PenCom reported that Nigerian pension assets grew by over N2.93 trillion between January and November 2023.
The allocation of pension assets primarily involves fixed-income securities, with approximately 66% of funds invested in FGN securities, particularly federal government bonds, amounting to around N11.25 trillion. This aligns with PenCom’s regulation for PFAs to adopt a conservative approach with public funds. The local equities market has also experienced growth, attributed to the bullish performance of the Nigerian stock market in 2023, yielding an annual return of 45.9%.
Detailed breakdowns of pension assets reveal that N1.49 trillion was invested in the local equities market as of November 2023, reflecting a 64% increase compared to N908 billion recorded in December 2022. Furthermore, N1.91 trillion was allocated to corporate debt securities, while N1.55 trillion is presently deployed in money market instruments.
The RSA Transfer System (RTS), an application facilitating RSA transfers between PFAs, plays a crucial role in streamlining the process. Transfer requests are processed based on Effective Transfer Dates (ETDs), corresponding to the last day of each Transfer Quarter: March 31st, June 30th, September 30th, and December 31st. RSA holders are eligible for subsequent transfers after 365 days from the date of their last approved transfer, as specified by the RSA Transfer Guideline. Once submitted on RTS and Provisional Approval is granted by the Commission, an RSA transfer request becomes irrevocable.
