The National Pension Commission (PenCom) has issued a stern warning to Pension Fund Administrators (PFAs) and employers, threatening regulatory sanctions—including suspension from the Retirement Savings Account (RSA) Transfer Window—against any party found to be coercing or unduly influencing employees’ decisions in opening or transferring their RSAs.
In a circular dated June 16, 2025, and referenced PenCom/INSP/SURV/Aut/2025/1013, the Commission said it would not hesitate to suspend any PFA engaged in such unethical practices. According to the circular, affected PFAs will be barred from receiving transfers and may only act as transferring institutions during the RSA transfer process.
The regulatory action follows growing concerns over illegal practices by some employers and affiliated financial institutions, where employees and even third-party vendors are allegedly pressured to either open RSAs with or transfer their accounts to PFAs linked to the employer, either directly or through Pension Fund Custodians (PFCs).
PenCom described these practices as violations of the Pension Reform Act (PRA) 2014, specifically referencing Section 11(1), which guarantees an employee’s right to open an RSA with a PFA of their choice, and Section 13, which allows for the transfer of RSAs once a year, under Commission guidelines.
The Commission further cited its earlier circular—ref: PENCOM/INSP/CIR/SURV/20/131, issued on August 14, 2020—which prohibits employers from influencing or directing the PFA choices of their employees.
“This practice is unacceptable,” PenCom stated. “It constitutes a clear violation of employees’ statutory rights and undermines the integrity of the Contributory Pension Scheme (CPS). Any act of inducement or compulsion—whether direct or indirect—erodes public confidence in the RSA transfer process.”
The Commission issued new directives to all Licensed Pension Fund Operators (LPFOs) and employers, emphasizing that:
PFAs must not collude with employers or their representatives to solicit RSA openings or transfers to specific firms.
Pension Fund Custodians (PFCs), as fiduciary agents, are obligated to report any attempt by affiliated PFAs or employers to manipulate the transfer process.
PenCom stated that any employer, particularly financial institutions, who engage in these practices will be sanctioned. “Employers are strictly prohibited from interfering in any manner with their employees’ rights to choose or transfer their RSA,” the statement read.
Regulatory penalties for defaulters could include monetary fines, withdrawal of RSA transfer privileges, and even criminal prosecution. The Commission maintained that the contributory pension system must be governed by fairness, transparency, and the voluntary consent of RSA holders.
The warning underscores the Commission’s determination to safeguard the credibility of the RSA transfer process and restore trust in the pension system. With the RSA Transfer Window launched to empower employees to take control of their retirement funds, PenCom said it is now cracking down on attempts by employers and PFAs to game the system through unethical influence.
In line with the PRA 2014, employees retain the right to switch PFAs once per year without external pressure. The Commission urged employees to report any instance of coercion or inducement, assuring them of full protection and confidentiality.
As the pension industry continues to mature, transparency and choice remain central pillars of the reform. PenCom reiterated that any effort to compromise these principles will be met with firm and decisive action.
