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Chuks Udo Okonta
The National Pension Commission (PenCom) says the decision to move annuity assets from life insurance companies to Pension Fund Custodians (PFCs) is to ensure consistency with Pension Reform Act (PRA) 2014 and strengthen the processing of administration of retirement benefits.
PenCom disclosed this in 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 Commission 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.
The circular which detailed the documentation and procedure of the transfer can be obtained from the link below.