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Chuks Udo Okonta
A circular issued by the National Pension Commission (PenCom) mandating life insurance operators to transfer annuity funds in their kitty to Pension Fund Custodians (PFCs) has raised a frenzy in the industry sector, as the National Insurance Commission (NAICOM) and insurance operators have kicked against the move, Inspen can report.
Investigations by Inspen, revealed that the circular has set many life insurers jittery, as transferring the fund would seriously affect their financial position.
Inspen 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.
Our source in the Nigerian Insurers Association (NIA), condemned the step taken by PenCom, stressing that proper consultations were not reached before the circular was issued.
He noted that PenCom as a regulator should have properly deliberated the issue with the insurance Regulator, the National Insurance Commission (NAICOM) before issuing the said circular.
He said the development would make the public believe there are unhealthy relationship between the regulators.
Our source in NAICOM said all efforts made to get PenCom to halt the decision failed, adding that two letters were written demanding for a meeting, but PenCom only wrote back to state that the decision it took remains its position.
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.
