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Chuks Udo Okonta
The National Pension Commission (PenCom) and National Insurance Commission (NAICOM) have resolved the annuity impasse by agreeing to allow life insurance companies to open operational accounts with Pension Fund Custodians (PFCs) of their choice.
The regulators in a joint circular made available to Inspenonline, said they are currently reviewing the regulation on retiree life annuity, which will be jointly released to the public in compliance with the PRA 2014 within 3 months of this notice.
The parties also agreed to allowed all new annuity purchased or being processed to be domiciled in the dedicated account with the PFC, while the treatment of all existing retiree life annuity funds and assets, should be dealt with upon issuance of the forthcoming joint regulation.
NAICOM was enjoined to ensure that Life Insurance companies comply with the requirements, while the processing and approvals of new retiree life annuity requests shall continue forthwith.
Pension Fund Administrators (PFAs) were asked to resume the processing of new annuity requests for retirees and forward same to PenCom for necessary approval without delay, and PenCom was asked to ensure that PFAs transfer all approved premium for Retiree Life Annuity to the Operational Accounts opened by the Life Insurance Companies with PFCs.
Recall, the Minister of Finance, Mrs. Kemi Adeosun, intervened and brokered a resolution to the dispute between the regulators directing them to issue a joint circular by Tuesday, March 21, 2017 that would supersede all previous circulars issued by the two regulatory agencies on the annuity matter.
The dispute was fanned by a circular issued by PenCom in November last year, directing life insurers to transfer custody of their annuity assets to PFCs and inform the commission accordingly.
The insurers were also required by the circular to suspend approving new requests for annuity pending the transfer of assets to PFCs.
The Minister noted that the Federal Ministry of Finance had received several complaints from pensioners in relation to the outstanding dispute. She drew the attention of both parties to the adverse impact the current situation is having on pensioners and reiterated that a prompt resolution of the matter is paramount.
The Circular
This is to notify members of the public and in particular stakeholders in the Insurance and Pension industries, that the Managements of the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom) have met to discuss issues pertaining to strengthening the administration of retiree life annuity as a mode of retirement benefit under the Pension Reform Act 2014 (PRA 2014) as follows.
1. Specifically, both NAICOM and PenCom re-affirmed the existence of Programmed Withdrawal and Life Annuity as modes of payment of retirement benefits under the PRA 2014.
2. Both NAICOM and PenCom are currently reviewing the Regulation on Retiree Life Annuity which will be jointly released to the public in compliance with the PRA 2014 within 3 months of this notice. In the meantime, the following shall apply.
i. All Life Insurance companies currently providing life annuity for retirees under the Contributory Pension Scheme (CPS) shall proceed to open Operational Accounts with Pension Fund Custodians (PFCs) of their choice.
ii. All new annuity purchased or being processed shall therefore be domiciled in the dedicated account with the PFC referred to in (i) above.
iii. The treatment of all existing retiree life annuity funds and assets would be dealt with upon issuance of the Joint Regulations referred to above.
iiii. NAICOM shall ensure that Life Insurance companies comply with the above requirements.
v. The processing and approvals of new retiree life annuity requests shall continue forthwith.
vi. All Pension Fund Administrators (PFAs) shall resume the processing of new annuity requests for retirees and forward same to PenCom for necessary approval without delay.
vii. PenCom shall ensure that PFAs transfer all approved premium for Retiree Life Annuity to the Operational Accounts opened by the Life Insurance Companies with PFCs.
