Retiree Life Annuity providers barred from investing in firms not paying dividends, bonuses


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Chuks Udo Okonta

Retiree Life Annuity (RLA) Providers have been charged to invest annuitants funds in only public limited companies that made taxable profits, paid dividends and issued bonus shares for a period of three years.

The directive was given in the Revised Regulation on Retirement Life Annuity Pursuant to the Pension Reform Act (PRA) 2014, recently issued by National Insurance Commission (NAICOM) and National Pension Commission (PenCom).

The RLA Providers were also enjoined to ensure that any bank in whose money market instrument RLA funds are invested shall have a minimum corporate rating of ‘A’ and that any debt instrument proposed for listing on the floor of any recognised security exchange through an initial public offer to enjoy RLA funds investment should have a minimum acceptable rating of ‘A’.

The providers were charged to ensure that investments of all funds relating to RLA are subject to limits as May be determined by NAICOM from time to time.

The regulators insisted that consistent violation of the regulation shall constitute a ground for suspension of the retirement life annuity provider from underwriting new businesses until the infractions are addressed.

According to them, where a violation adversely affects payment of monthly or quarterly annuity to a retiree(s), NAICOM shall impose appropriate regulatory sanctions on the retirement life annuity provider.

Any insurance agent who violates provisions of the regulation shall be sanctioned appropriately by NAICOM, both parties agreed.

They also posited that all infractions and violations by pension fund administrators and retirement life annuity custodians shall be determined and enforced in line with the regime of sanctions made pursuant to the PRA 2014 as prescribed by PenCom from time to time.

The regulators said all infractions and violations by RLA providers and insurance brokers/agents shall be subject to such penalties as may be prescribed by NAICOM from time to time.

To ensure proper training for operators, NAICOM and PenCom maintained that RLA providers shall not later than December 31, every year, should submit a staff training plan in respect to successive year to NAICOM.

The training program, they said, shall cover all relevant aspect of RLA business operations, including marketing and sales, underwriting, solvency, investment, record keeping, filing of returns and customer service.

NAICOM was given the privilege to organise annuity training for RLA providers and brokers from time to time, while staff and agents of RLA business shall receive a minimum of one training on administration of RLA product every year.

For effective marketing, the regulators said marketing of RLA shall be done by direct contact of employees of RLA provider or insurance broker/agent, who have undergone retirement planing competence training certified by NAICOM.

Both parties also maintained that going forward, the list of approved insurance brokers eligible to transact RLA business shall be published yearly on their websites.

They mandated all PFAs and RLA Custodians to abide by the code of ethics and business practices for licensed pension operators and that all RLA providers are required to adhere to the market conducts and business practice guidelines for insurance institutions in Nigeria.

Operators were urged to ensure all basic features are disclosed in their marketing materials.

According to the new rule, all licensed RLA providers shall be responsible for the actions of their appointed insurance agents and all licensed insurance agents shall now carry identification cards bearing their registration number and name of their principal while marketing the RLA product of their principal.

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