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What you need to know about new RSA multi-fund structure RSA

By Victor Ahiuma-Young

THE new RSA Multi-Fund Structure recently introduced by the National Pension Commission, PenCom, involves the creation of multiple Retirement Savings Account, RSA Funds, with respective assets allocation, made to fit into the different demographic (age) profiles and risk appetites of registered contributors i.e. Young, Middle-age and Retirees.

According to the National Pension Commission, PenCom, the following are basic issues needed to be known about the new RSA Multi-Fund Structure.

*How is the RSA Multi-Fund Structure different from the existing RSA ‘Active and ‘Retiree Funds?

There are currently two RSA Funds: The RSA ‘Active Fund: which covers all RSA holders in active employment and making monthly pension contributions into their RSAs. The RSA ‘Retiree Fund: for RSA holders who have retired from active employment and are now receiving periodic pension benefits.

However, the new RSA Multi-Fund Structure shall comprise four Funds as follows:  Fund I: For Young Contributors, based on choice (Contributors aged 50 and above are not allowed).   Fund 2: For Young and Middle-aged Contributors (Ages 49 yrs and below).  Fund 3: For Pre-Retirees (For Contributors aged 50 yrs and above; but still in active employment). Fund 4: For Retirees (60 yrs and above).

*Does this new RSA Multi-Fund Structure cover all Contributors?

This RSA Multi-Fund structure would cover all existing and future Contributors/RSA holders.

*Would all Pension Fund Administrators provide the RSA Multi-Fund Structure to its Contributors?

Yes, all PFAs are expected to provide the RSA Multi-Fund Structure to its Contributors.

*How would Contributors be assigned to the various Funds?

On the first day of the implementation of the RSA Multi-Fund Structure by PFAs, Contributors would be assigned as follows: i. Contributors who are 49 years and below, would be assigned to Fund II; ii. Contributors who are 50 years and above would be assigned to Fund III; iii. Existing Retirees would be retained in Fund IV; iiii. A Contributor who is 49 years and below, who so desires, could make a formal application to his/her PFA to be moved to FundI.

*Can I split the funds in my RSA between two funds?

No. An RSA holder shall not be allowed to split the funds in his/her RSA between two Funds.

*Am I allowed to choose a Fund, other than the Fund allocated to my demographic?

Yes, an active Contributor in Fund II (aged 49 years and below) who wishes to be assigned to Fund I shall make a formal request to his/her PFA. In addition, an active Contributor in Fund III (aged 50 years and above) who wishes to move to Fund II shall make a formal request to his/her PFA. However, Contributors over 50 years and Retirees shall not be allowed to move to Fund I.

*Can I mandate my PFA in which Fund I want my contributions to be invested?

Yes, as stated previously, Contributors aged 49 years and below can make an active choice to be moved to Fund I. Also, Contributors aged 50 years and above can make an active choice to be moved to Fund II, but shall not be able to move to Fund I.

*Can I determine in which individual assets my contributions are to be invested by the PFA?

No. The Pension Fund Administrators are licensed by the National Pension Commission to invest and administer pension fund assets, on behalf of the RSA holders, based on the Guidelines and Regulations issued by the Commission.

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*What are the limits on the number of times I can switch Funds in a year? An active Contributor may upon formal application to the PFA, switch from one Fund Type to another Fund Type within the PFA, twice yearly.

*Am I expected to pay fees for switching of Funds?

The first switch made in a year shall be free of charge. However, the subsequent request for switching of Funds within the same year, shall be subject to charges, to be determined by the Commission.

*Does my PIN number change as I switch between Funds?

No, your PIN number does not change as you switch Funds. It is portable and assigned to you for life.

*Where can a Contributor obtain information on the performance of each Fund, as a basis to take a decision on whether to switch Funds?

Section 55 (d) of the PRA 2014, mandates licensed Pension Fund Administrators to provide regular information on the pension fund’s investment strategy, rate of returns and other performance indicators to Contributors. Accordingly, a PFA is expected to display its annual historical rates of return on its website or make them available to a Contributor, based on request.

*Do the PFAs and PFCs have the necessary infrastructure to support the implementation of the RSA Multi Fund Structure?

Yes, PFAs have the resources and complementary infrastructure to implement the RSA MultiFund Structure.

*Will the Management Fees differ per Fund?

Yes. The management fees on Funds I, II and III shall be Asset Based Fees, due to the fact that monthly contributions are being made by members and the Funds require active management. However, the management fees on Fund IV shall be Income Based Fees, in order to reduce the costs and enhance returns to members, since they are already retired.

The fee rate on Fund I shall be the highest, as this will require more active management and returns on this Fund are expected to be the highest in the long run. There shall be a graduated reduction in the fee rates on Funds II and III, while the fees on Fund IV shall be income based fees.

*What are the applicable fees on the various Funds?

Information on the applicable fees on the various Funds will be provided by the Commission, from time to time, as detailed in the Regulation on Fee Structure, approved by the Commission.

*How do I initiate the process to switch Funds?

Please, contact the nearest branch of your Pension Fund Administrator, who would provide you with the necessary information to aid your decision to switch Funds.


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