Q: What are the functions of a Pension Fund Administrator and a Pension Fund Custodian and what is the main difference?

A: A Pension Fund Administrator (PFA) is charged with the responsibility of managing and investing the pension funds and assets. It is the responsibility of the PFA to Open a Retirement Savings Account (RSA) for all employees who choose it ; Invest and manage pension funds and assets; Maintain books of account on all transactions relating to pension funds managed; Provide regular information on investment strategy, market returns and other performance indicators to the RSA holders, Provide customer service support to RSA holders and ensure that retirement benefits are paid to employees and be responsible for all calculations in relation to retirement benefits
The Pension Fund Custodian (PFC) is charged with holding contributions and investment instruments on behalf of the Pension Fund Administrator. Within 7 days of the payment of salaries, the employer remits the contributions to the PFC, who receives it on behalf of the PFA and within 24 hours notifies the PFA of receipt of the contributions. The PFC’s functions also include holding all the pension fund and assets in safe custody and settling transactions and undertaking activities relating to the administration (such as collection of dividends) on behalf of the PFA.
The main difference between the PFA and the PFC is that the PFA manages the pension funds and decides which kind of investments to make while the PFC holds the pension funds and assets and acts on the order of the PFA.