Pension: Managers fail in enlisting new contributors, resort to poaching

•Poaching grows by 3,315%, new contributors by 20%
•Experts blame transfer window policy, seek restructuring
•Assets have grown but not in real terms – PenCom

By Rosemary Iwunze

There are indications that pension fund Administrators, PFAs, are still struggling to enlist new pension contributors despite massive growth in the size of the country’s pension assets.

Data from the National Pension Commission, PenCom, indicates that pension assets have grown to over N22.5 trillion, about 83 per cent over the last five years, when it stood at N12.3 trillion.

But the same data shows that in sharp contrast, the number of new pension contributors grew by merely 20.8 per cent to 391,958 over the same period from 324,552 recorded in 2020.

Meanwhile, as a result of their inability to grow their portfolio by enlisting new pension account holders, the PenCom data also indicates that the pension fund management companies have resorted to poaching contributors from one another, recycling existing account holders.

Confirming this development, the PenCom data shows that the number of recycled pension contributors among PFAs ballooned by 3,315 per cent during the period, to 95,585 in 2024 from 2,799 in 2020.

Pension industry experts have raised an alarm that the industry is growing inorganically while the organic growth has stunted.

The organic growth is anchored mainly on bringing new pension account holders into the Contributory Pension Scheme, CPS.

However, the sharp growth in pension assets over the past five years, as noted by experts, has been deemed inorganic, primarily due to the investment of existing funds in various investment vehicles, particularly FGN securities.

Total amount of the pension fund invested in FGN securities within the five years grew by 74.1 per cent to N14.1 trillion in 2024 from N8.1 trillion in 2020.

It was unclear why the new enlistments were dragging, but some industry stakeholders believe the PFAs have been distracted by poaching as an easier means of growing their Assets Under Management (AUM) than going for fresh entrants.

This development, according to the industry observers, may have undermined the original objective of the CPS.

PenCom in 2020 introduced the Pension Transfer Window, PTW, which allowed Retired Savings Account, RSA, holders (pension contributors), to move their account from one PFA to another.

Consequently, the PFAs resorted to aggressive poaching of pension contributors from one another as the main focus of competition, hence the prevalence of customer recycling in the industry.

Experts’ opinion

Some pension industry stakeholders have called for a restructuring of the PTW to curtail the overreliance on poaching, which undermines the growth of the industry.

They argue that the PenCom should either close the PTW window or restructure so that PFAs can only transfer RSAs once a year, against the current system, where it is done every quarter.

They argued that the current sharp growth in pension assets is not real, and if the sector remains on this trajectory, the industry could become stagnant.

Commenting on this situation at the 2025 Pensions Leadership Retreat in Lagos, the Director General of PenCom, Ms. Omolola Oloworaran, confirmed that the pension industry is no longer growing in real terms.

She stated: “Over the past two decades, our industry has achieved remarkable milestones of over N23 trillion in assets under management, more than 10 million contributors, and a regulatory framework that is globally respected.

“But we must also confront an uncomfortable truth: the pension industry is no longer growing in real terms. We are witnessing a concerning trend where Pension Fund Administrators are merely transferring Retirement Savings Account (RSA) balances among themselves, with limited net new contributions or meaningful expansion into untapped segments.

This is circular growth, not real growth and it must change. If we remain on this trajectory, we risk managing a mature but stagnant system.”

The PenCom boss noted that the industry needs exponential growth where pension assets could act as catalysts for national development.

“What we need is exponential growth that opens access to the over 77 million informal sector workers, of whom fewer than 10,000 are currently active contributors; Growth that fuels infrastructure and food security, two of Nigeria’s most urgent national priorities, as well as growth that delivers real economic value and preserves dignity in retirement.”

The PenCom DG further stated: “The Nigerian pension industry has the power to shift the development trajectory of our nation, but only if we lead with vision and execute with courage.”

Also speaking on the development, Dr. Doyin Salami, an Economist who was chief economic adviser to former President Muhammadu Buhari at the time the sharp growth in pension assets was recorded, said that the PFAs do not represent pension contributors but represent themselves.

Salami stated: “The PFAs have let us down badly, all of us who are pension contributors. They have totally bastardised the assets that we all gave them. The PFAs have failed woefully and as an industry, there should be people who are speaking for the contributor and speaking to the wealth of the contributor.

“The PFAs do not represent us as pension contributors; they represent themselves as managers.”

Also speaking, the Micro Pension and Agency Manager at Stanbic IBTC Pension Managers Limited, Mr. Obinna Lewis-Asonye, said that most salespeople are not bringing new business; rather they are recycling money within the pension industry.

He stated: “What is happening is that each PFA is going to an already established person, so the money keeps going round. You hear people say ‘I don’t like Stanbic,’ they will go to ARM, ‘I don’t like ARM,’ they will go to another one. So the money is going round. So the organic growth that Stanbic has been doing and pushing in the industry, nobody is doing it again.

“PenCom should restructure the transfer window so that RSAs can only be transferred once in a year. That means PFAs will have to aggressively target people because right now, most of the sales people are not bringing new businesses; they are recycling money within the pension industry.

“We have noticed that there has been no growth but PFAs have just been pushing the money round. Their focus is with the money that is already in the system and not bringing new customers. So the industry should go back to the basics. “The transfer window was meant to improve service. There should be a valid reason for transferring RSA. The transfer window is not bringing in new money, people are rather targeting existing contributors.

“For example, everybody is targeting Stanbic and the PFAs are relaxed, they don’t go out, their teams are not looking to new markets.”

Meanwhile, the Pension Fund Operators Association of Nigeria, PenOp, reiterated that they are being creative and focused on ensuring that the value of pensions that retirees receive in retirement will be enough to live comfortably, especially in light of the rising inflation and devaluation of the local currency.

According to PenOp, it will continue to work on constant education and enlightenment of Nigerians, both literate and illiterate, on the workings of the scheme and the positive impact of the industry on the economy as many Nigerians don’t seem to understand the basics of the scheme.

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