NIA warns PenCom against transfer of over N145.05bn retirees’ fund

NIA warns PenCom against transfer of over N145.05bn retirees’ fund

UBA personal banking

Against the circular issued by the National Pension Commission (PenCom) to life insurance operators to transfer over N145.05 billion annuity fund in their kitty to Pension Fund Custodians (PFCs), the Nigerian Insurers Association (NIA) has warned that the decision would pull down annuity business.

A Board member of the association who spoke in confidence said that if PenCom goes ahead to implement the mandate, Pension Fund Administrators (PFAs) would leverage it to de-market annuity business, a development which would not be good for pension benefits operations in the country.

He noted that the association is engaging the National Insurance Commission (NAICOM) to see that the circular is withdrawn, stressing that the association would also reach out to PenCom to resolve the issue.

Asked if he was aware that insurance operators were allowing retirees to use their funds are collateral for loads an act which negates pension law, he said annuity fund should not be taken as pension contributions, adding that annuity funds which are from retirees is different from pension contributions from workers.

He maintained that the alleged misdeeds raised by PenCom would have been tabled before NAICOM instead of taking unilateral decision to kill annuity business.

According to him, since both regulators, operate within the financial sector and report to the Minister of Finance, such issue would have been tabled form the Minister if they could not find a common ground to agree.

It was gathered from PenCom, that the circular was issued to curb unethical practices by some life insurers, who have been wooing retirees with loans. A development our source said, contradicts the pension law.

According to the source, some insurers are allowing retirees use their annuity fund as collateral for loads.

It was gathered that PenCom took the decision to ensure that all pension funds are kept in the custody of the Pension Fund Custodians as specified the law.

In the retirement benefits business, Life insurance operators have continued to trail behind Pension Fund Administrators (PFAs) as retirees under Programmed Withdrawal (PW) stood at 132,405 and annuity 29,620 as at the end of March 2016.

PenCom said the total of retirees on PW increased from 126,775 in the fourth quarter, 2015 to 132,405 in the first quarter 2016, adding that the 5630 increase represented 4.44 per cent from the figure recorded in the previous quarter.

It noted that a sectoral breakdown of those retired under the PW showed that the public sector accounted for 71.74 per cent (4,039) of the total retirees on PW during the quarter, while the private sector recorded 28.28 per cent totaling 1,591 retirees.

PenCom noted that the lump sum withdrawals within the quarter stood at N12.63 billion, which cumulatively amounted to N329.38 billion from inception. It said an average of N4.36 billion was paid monthly to the retirees of the scheme as monthly PW as at the end of the reporting period.

The commission said it approved a total of 3,288 applications for annuity retirement plan during the quarter, bringing the total number of retirees receiving their retirement benefits through annuity plan to 29,620.

PenCom maintained that the 3,288 retirees received N3.96 billion as lump sum payment and paid annuity premium of N15.44 billion cumulating to a total of N41.85 billion and N145.05 billion as lump sum payment and annuity premium respectively.

The retirees, it said were receiving average monthly annuity of N1.51 billion as at the end of March 2016.

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