3.5 million Unfunded RSAs, effects and way forward

April 4, 2021 PensionNigeria

The National Pension Commission (PenCom) has disclosed that 3.5 million Retirement Savings Accounts (RSAs) are unfunded, this was disclosed in the 4th quarter 2020 report released by PenCom. The total number of RSAs as at end of 4th quarter 2020 was 9,215,788, the 3.5 million unfunded RSAs represent about 38% of the total RSAs under the Contributory Pension Scheme (CPS).

Unfunded RSAs are very bad for the pension industry because retirees with unfunded RSAs will NOT be able to access their pension and this will send a wrong signal to other people about the Contributory Pension Scheme in Nigeria.

An unfunded RSA majorly occurs when an employer does not remit for an employee or where the employer remits but with incomplete information to enable the Pension Fund Administrator (PFA) upload the pension contribution for the respective RSA holders.

PenCom in its report noted that the majority of these unfunded RSAs belong to employees of State Governments and private sector organizations.

We can now categorically say that PenCom can not force State governments to remit but they continuously liaise and encourage state governments to remit. PenCom periodically releases the status of implementation of Contributory Pension Scheme (CPS) in states, and the report reveals that most states are not compliant. House of Representatives also recently called on the Federal Government to prevail on states to fully implement the CPS.

PenCom on the other hand has full power to mandate private sector employers to fund their employees RSAs but we have not seen PenCom fully utilize that power. We are aware that PenCom has employed the services of recovery agents to go after defaulting employers but we are convinced based on the outcome of events that alot more still needs to be done. PenCom needs to decentralize recovery agents to enable them go all out on defaulting employers and PenCom also needs to revamp the process of reporting defaulting employers.

Apart from employers not remitting for their employees at all, the other issue is where the employer remits with incomplete information which prevents the PFA from crediting the employee’s RSA. This is what is referred to as un-credited pension contributions domiciled in the Contribution Reconciliation Accounts (CRAs) and the Transitional Contributory Funds (TCFs) of the Pension Operators. PenCom has however mandated the Pension Operators to ensure resolution of all outstanding un-credited contributions and file progress reports at regular intervals to PenCom

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Check below for PensionNigeria breakdown of all the important aspects of the PenCom 4th Quarter 2020 Report

DONT MISS PenCom Q42020 Quarterly Report Series
Analysis of Pension Operating Environment Q4 2020
How PenCom monitored the Pension Industry in Q4 2020
5.1 million RSAs have Incomplete Documentation
3.5 million Unfunded RSAs, effects and way forward
Appointments to Pension Operators’ Boards in Q4 2020
PenCom issued 1,877 organizations Compliance Certificates in Q42020
19 Employers paid N170 million Penalty for late Remittance of Pension Contribution
Update on NSITF & Refund of Pension Contribution to Military & SSS
Status of Implementation of CPS in States as at December 2020
Biggest PFAs by RSA Registrations December 2020
Update on the RSA Transfer System (RTS), 2,799 RSA holders Change PFAs
Pension Operators paid N90.99 billion Retirement Benefits Q4/2020

Also Check out
Performance of all PFAs in Nigeria for Full Year 2020
Performance of all PFAs in Nigeria for Full Year 2019
Performance of all PFAs in Nigeria for Full Year 2018

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