After my first article on the best pension fund managers in Nigeria, a few people have commented differently on the article.

In response to the comments, I have decided to do another article on the pros and cons of Pension Fund Administrator (PFA) transfer. Here are some of the advantages

Better Performance

The major reason for any investment is to make gains. Most investment gains are measured with investment performance. When a fund manager performs poorly relative to his or her peers and relative to the benchmark, he is due for a change. Therefore, an advantage of transferring from one PFA to another is that if the fund manager you transfer to has a history of consistently outperforming the peers and benchmark, you will benefit from the new fund manager’s higher performance.

Alignment with Risk Appetite Each investor or RSA holder has his or her risk appetite and risk tolerance and different asset types or classes are suitable for different risk appetite.

By looking through the portfolio structure of different PFAs, it is possible to know which PFA’s asset allocation best aligns with your risk appetite. Therefore, you get the advantage of aligning the PFA’s asset allocation to your risk appetite by transferring to the PFA whose asset allocation is in agreement to your risk make up.

Fund Manager Fee Management

Although the National Pension Commission, PenCom, has guidelines about the type of fees that fund managers should charge, there are slight disparities in fees charged by different PFAs. By reviewing the fee charts of different PFAs, you may be able to transfer to a PFA in such a way that you save on fees without sacrificing other beneficial services.

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