Custody of annuity: NAICOM, PenCom feud continues as regulators fail to meet

A planned meeting between the National Insurance Commission (NAICOM) and National Pension Commission (PenCom) scheduled to end the growing feud between the regulators over the mandate given to life insurers to transfer annuity assets in their kitty to Pension Fund Custodians (PFCs) failed to hold.

It was gathered that the meeting was initiated by NAICOM to enable the regulators seek ways to resolve the issue that had raised tension amongst life insurance and pension operators was postponed by the insurance regulator to new date yet to be fixed.

Meanwhile, the leadership of the Nigerian Insurers Association (NIA), the umbrella body of insurance underwriters who are directly involved in the argument were left out of the scheduled meeting.

Sunday Thomas, Director-General of the association, during a chat with our reporter said, “We have not invited to the meeting, but we are waiting for the outcome of their meeting.”

The Daily Times had early this month reported that the PenCom mandated life insurers to stop annuity business for three months and within the period transfer their annuity assets to PFCs. Although, NAICOM and insurers were not comfortable with the directive.

According to PenCom the decision to move annuity assets from life insurers to PFCs is to ensure consistency with Pension Reform Act (PRA) 2014 and strengthen the processing of administration of retirement benefits.

A circular entitled: Strengthening the Administration of Retirement Benefits under the Pension Reform Act (PRA) 2014, with reference number PENCOM/INSP/CIR/TECH/16/17, issued on November 3, 2016, to pension fund administrators and Custodians and signed by its Head, Surveillance Department, Muhammad Umar, the pension regulator noted that in line with the PRA 2014, it resolved that the custody of retiree life annuity shall henceforth, be domiciled with PFCs as provided for in Section 56 of the pension act.

PenCom mandated all life insurance companies currently providing life annuity for retirees under the Contributory Pension Scheme (CPS) to open an operational account jointly with a PFC of their choice and advice the commission.

It maintained that all life insurance companies currently providing retiree life annuity under the CPS should transfer the corresponding assets in their possession/custody to the PFC of their choice.

The commission also noted that the approval of new request for annuity should be put on hold with immediate effect, until life insurance companies meet the custody and transfer conditions.

PenCom said life insurance companies are required to open an account with the custodian of their choice and also execute custodial service agreement that shall state the terms and conditions of the contract between the parties.

NIA quick move to stop PenCom

Similarly, the Nigerian Insurers Association (NIA) had dragged the National Pension Commission (PenCom) to the National Assembly; Secretary of the Federal Government; Minister of Finance and other government agencies in a quick move to stop PenCom over transfer of annuity assets.

The Director-General of the Association, Sunday Thomas, who confirmed the move to our reporter noted that in line with the law, PenCom lacks legal grounds to call for transfer of annuity assets which is different from pension contributions, stressing that he is optimistic, the circular would be withdrawn by the pension regulator.