Induced RSA Transfer: Regulatory Axe Dangles Over PFAs

Any Pension Fund Administrators (PFA) who convinces or induces Retirement Savings Account (RSA) holders or employees to transfer his or her account from one PFA to another will have such erring entities barred from the pension industry transfer window, says the National Pension Commission (PenCom).
In a circular titled: PenCom/INSP/SURV/Aut/2025/1013; dated 16 June 2025 and entitled; ‘Illegal and Unethical Practices Regarding Opening of Retirement Savings Account (RSA) and Retirement Savings

Account Transfer,’ sent to all Licensed Pension Fund Operators And Employers, said, defaulting PFAs can only participate as a transferring PFA and not a receiver as there would also be criminal prosecution for any employer or individual infringing on employees’ statutory rights to choose their PFA or transfer their RSA, contrary to the provisions of the PRA 2014 and relevant extant subsidiary legislations issued by the Commission.

The regulator said, it has observed with concern, the illegal and unethical practices by certain financial institutions and employers, where their employees and that of their vendors are being coerced or unduly influenced to open or transfer their Retirement Savings Accounts (RSAs) with specific Pension Fund Administrators (PFAs), particularly, those directly affiliated with the employer or indirectly through custody of their pension assets with Pension Fund Custodians (PFCs).

This practice, PenCom said, is unacceptable and constitutes a clear violation of the following provisions of the Pension Reform Act (PRA) 2014 and relevant Regulation/Circular issued by the Commission.

“Section 11(1) of the PRA 2014 provides that every employee to whom the Act applies shall maintain a RSA in his/her name with any PFA of his/her choice. Section 13 of the PRA 2014 also provides that subject to the Guidelines issued by the Commission, a holder of RSA maintained under the Act may, not more than once in a year, transfer his/her account from one PFA to another,” it stressed.

Section 2.3 of the Commission’s Circular ref: PENCOM/INSP/CIR/SURV/20/131, dated 14th of August 2020 on RSA Transfers, explicitly prohibits employers from influencing the choice of PFA by employees.

“The choice of PFA and RSA Transfer are the statutory rights of the RSA holders and must not, under any circumstance, be influenced by their employers or their affiliates. Any act of inducement or compulsion whether direct or indirect undermines the integrity of the Contributory Pension Scheme and the credibility of the RSA Transfer Process,” it warned.

Employers, particularly financial institutions, PenCom warned, are strictly prohibited from interfering with the statutory rights of their employees or that of their vendors regarding the choice of PFA and RSA Transfer.