LAGOS, Nigeria – A total of 101,820 Retirement Savings Account (RSA) holders switched their Pension Fund Administrators (PFA) in 2023, marking a 10.2% increase from the previous year and setting a new record for the highest number of transfers. The value transferred amounted to N462 billion, a sharp 28% increase from the previous year and bringing the total transferred since the reopening of the transfer window in Q4 2020 to N1.14 trillion.
This trend is consistent with section 13 of the Pension Reform Act (PRA) 2024, which allows RSA holders to transfer their accounts from one PFA to another. The aim is to enhance efficiency in the industry by promoting healthy competition among administrators. This move was also accompanied by the recapitalization of PFAs, which led to a series of mergers and acquisitions in the industry.
The Nigerian pension industry has witnessed substantial growth in recent years, with over 950,000 new RSA registrations in the last three years, bringing the total registrations to 10.16 million people. In addition, total pension assets reached a record high of N17.93 trillion as of November 2023, reflecting a 1.5% increase from the previous month and a total increase of over N2.93 trillion for the year.
The majority of pension assets have been invested in fixed-income securities, with around 66% allocated to FGN securities, particularly federal government bonds. However, there has been a notable increase in investments in the local stock market, which posted an impressive 45.9% annual return in 2023. Investments in the local equities market rose by 64% compared to the previous year, reaching a total of N1.49 trillion.
As for the RSA Transfer System, an electronic platform known as the RSA Transfer System (RTS) is used to coordinate all processes related to RSA transfers from one PFA to another. The system provides real-time monitoring and processing of transfer requests, aligning with the RSA Transfer Guideline’s requirements for Effective Transfer Dates (ETDs) and eligibility guidelines. Notably, once an RSA transfer request is submitted on RTS and given provisional approval by the Commission, it becomes irrevocable.
As the industry continues to evolve and record significant growth, it is crucial for stakeholders to monitor the impact of these developments on the pension landscape and the overall financial sector. With the increase in the number of RSA transfers and the deployment of pension assets into different investment vehicles, the industry’s dynamics are shifting, creating new opportunities and challenges for both administrators and investors.