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Read this before you switch your Pension Fund Administrator (PFA)

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As the RSA transfer window system has launched officially, many RSA holders will take the opportunity to switch from one PFA to the other. However, when you decide to change your PFA, there are various factors to put into consideration as retirement savings account holder. We explained in this piece some of the most important factors you need to consider to help you make an informed decision.

Do you really need to switch?

This is a question that only the RSA holder can honestly answer. Besides the newness that comes with the transfer window system and the urge to try it out, what else is the motivating factor for most people that want to switch PFA?

Do you just want to switch for the fun if it?

Do you even know whether your PFA has served you better than it should in terms of service delivery or return? Or do you just believe that is the best you can get?

In any case, if you decide to switch your PFA, you should consider the following important factors that will help you make an informed decision, and maybe, you will even become better of as you become aware of those important factors which you haven’t taken into consideration before now.

1. RSA Fund performance

Return on investments on pension contributions or the performance of pension funds is a key factor to consider when choosing to move to a PFA of choice. A PFA whose fund performance or return is consistently and largely below industrial average over a period would not be a great choice. As inflation is ravaging the economy and eating up return on investments, it is critical to look closely at this important factor before making the switch otherwise, the growth of the RSA will be affected.

A quick check on the PFA’s fund prices on their websites over time will help reveal the fund performance over time. An upward trend in fund prices is a good sign that RSA will also continue to grow while the opposite is not a good sign.

In addition, it is important to compare the trend with industry average performance to know how well the particular PFA has performed in relation to its pairs in the industry.

2. Responsive Customer service

When making a switch, it is important to consider a PFA with a responsive customer service team. With increasing attention to service delivery and customer experience, the PFA that stands out in this area will definitely be the preferred one.

An RSA holder will do well with a PFA that is always available to cater to his requests and inquiries when the need arises. There’s no better time in the Nigerian pension industry to echo the slogan “customer is king”.

3. Digital Accessibility

The world has gone digital and business organization that is not ready to face this reality will be left behind to die. Digital accessibility is a critical factor to consider when making a switch. Over half of pension contributors are young and active.

Research has shown over time that the majority of these active populations use one digital device or the other to access information and services. They prefer to get their issues resolved instantly and online too rather than going physical. In today’s business environment, digital accessibility has proved to be effective in solving business problems.

The pension business is no exception. Before changing PFA, an RSA holder should do research on whether his chosen PFA is digitally ready to serve him. A basic check such as working mobile app, responsive website, active online assisted services, and social media presence would be a good place to start from.

4. Fund Management charges

Every PFA charges you for the service it renders. The charges are in two folds: Admin charge and Management fee charge. The admin charge is between ₦50/₦100 per contribution while the management fee charge is a percentage of the fund size or income earned on the fund.

According to PenCom, the maximum fee based on fund size ranges between 1.1% and 1.5% depending on the fund type while it is 5% for funds based on income earned. It is interesting to note that most PFAs charge similar fees across board and this basis might not really be a distinguishing factor now. Notwithstanding, it will be interesting to see which PFA is willing to reduce some of these charges in the nearest future as competition intensifies.

It is therefore important for an RSA holder to know how much a PFA is charging for its services before switching because these are some of the costs of movement.

The above are some important factors an RSA holder should consider critically before making the move. If your PFA ticks all the above boxes well enough, then you might need to consider your choice again as you are better off staying with them. In any case, the choice is yours.

You can learn how to Transfer your RSA here in our previous publication of you need a guide.

If you have any questions, kindly reach out to us here for more clarifications.

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