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‘Investment decisions, benefits payment’ — PenCom lists mandates of PFAs

‘Investment decisions, benefits payment’ — PenCom lists mandates of PFAs
April 28
10:57 2023

The National Pension Commission (PenCom) has highlighted some of the responsibilities of pension fund administrators (PFAs) to employees, as they perform “an array of functions under the contributory pension scheme (CPS)”.

In a recent statement, the agency said the successes attained since the advent of the CPS in Nigeria are often ascribed to the fundamental structures upon which the system was built.

PenCom said a vital feature of the scheme is the separation of management and custody of pension funds.

According to the organisation, PFAs are saddled with the responsibility of managing pension funds while pension fund custodians (PFCs) are responsible for the custody of the funds.


The commission said it licences, supervises, and regulates the pension fund operators, noting that there are currently 20 PFAs managing pension fund assets on behalf of retirement savings account (RSA) holders.

PenCom believes that understanding the role of PFAs will provide further insight into the workings of the CPS.

In this piece, TheCable highlights some of the responsibilities of PFAs.



According to PenCom, the PFA is responsible for opening RSAs for interested employees.

“The PFA issues an employee a personal identification number (PIN) upon opening the RSA,” the commission said. 

“To open an RSA, the employee has to complete the RSA registration forms and provide other necessary documentation.


“It is noteworthy to state that selecting a PFA is an employee’s exclusive right.”


PenCom said the PFAs are also responsible for crediting RSAs with monthly pension contributions.

The agency explained that the employer deducts the monthly pension contributions and remits them to the PFC with an accompanying schedule containing the employees’ names, RSA PINs and other details.


“The PFC, in turn, advises the PFA upon receiving the contributions and schedules,” PenCom added.

The commission also said the PFA pools the pension contributions in individual RSAs into a fund that invests in various allowable asset classes. 


“The PFA is responsible for making investment decisions to ensure safety and fair returns for the benefit of contributors,” the agency said.

“These investment decisions must be in accordance with the investment regulations issued by PenCom. All incomes earned are exclusively for the benefit of contributors.


“Consequently, the PFA exercises investment decisions on trust as a fiduciary duty on behalf of contributors.”



PenCom noted that the main objective of the CPS is to ensure the payment of retirement benefits as and when due; as a result, the PFA is in charge of processing the retirement benefits of a retiree.

The pension office said benefits payments “include ensuring the retiree provides all required documentation at least six months before retirement”.

The PFA is also responsible for obtaining necessary approvals from PenCom and “issuance of instructions to the PFC to disburse retirement benefits”.

In addition, the PFAs, the commission said, provide various customer support services to the RSA holders, including issuing RSA statements at least once every quarter.

In executing this function, PenCom said it ensures that “PFAs have sufficient branches to serve locations with a significant number of registered RSAs under their management”.

The agency added that the PFAs must have the necessary technology to facilitate access to their services for RSA holders.


The PFAs, TheCable understood, also maintain proper books of account and render off-site returns to PenCom. This off-site returns assist PenCom in supervising the PFAs adequately.

“The returns include the daily valuation reports on investment and monthly and quarterly returns on various aspects of PFAs’ operations,” the office said.

“The PFA is responsible for appointing a licenced PFC to provide custody and safekeeping for the pension funds under its management.

“The PFC is responsible for executing all transactions as instructed by the PFA, provided that such instructions are in accordance with the investment regulations issued by PenCom.”

In addition to the off-site reviews, PenCom said it also conducts routine on-site examinations annually and special investigations “whenever needed”.

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