Chuks Udo Okonta
Nigerian Insurers Association (NIA) the umbrella body of underwriters has opposed the initiative in the proposed pension bill to domicile annuity funds with Pension Fund Custodians (PFCs), Inspen has learnt.
The Director-General NIA, Sunday Thomas in an interview, said the association has expressed its misgivings on the issue at a public hearing for review of the Pension Reform Act 2004, in Abuja, last week. He noted that the association is opposing the initiative because the management of annuity is totally different from programme withdrawal, hence, the fund should not be left in the hands of PFCs.
He said: “The Pension report is dealing with different aspects, one of them is the fact that Life annuity funds should be domiciled with pension custodians. We have said that is not in practice in any known jurisdiction, and we do not think it should be so, because the management of pension annuity is entirely different from programme withdrawal. The bases of the liability from both pension arrangements are totally different.”
The proposed bill, seeks to negate the operational guideline entitled: Regulation on Annuity under Section 4.1 (B) of the Pension Reform Act 2004, issued by the National Insurance Commission (NAICOM) and National Pension Commission (PenCom), which provides that where a retiree chooses the retirement life annuity, the retiree shall based on the Retirement Saving Account (RSA) balance projected to the date of retirement, obtain quotes from life annuity from list of approved eligible insurance companies, as will be provided every quarter by the NAICOM.
The guideline, also states that the PFA managing the account of the would-be annuitant shall, within seven days from the receipt of application from the retiree, seek approval from PenCom to transfer the agreed premium to the insurer and the requests should be accompanied with a copy of a provisional agreement. And the PFA shall instruct the PFC to issue cheque for the premium in favour of the insurance company within seven working days of receipt of approval.
It noted that upon receipt of the cheque from the PFC, the life insurance company shall within seven days notify the proposed annuitant of such receipt, adding that the annuitant and his chosen life company shall jointly execute an annuity contract within 21 days from the date of receipt of payment. Thereafter, the life insurance company shall cause a schedule of all policies written to be forwarded to NAICOM not later than 30 days of its execution. And that NAICOM shall forward a copy of the schedule to PenCom on a quarterly basis.
The Life Insurance Company is also mandated to issue a standing payment order to its banker to credit the designated bank account of the retiree for the amount of monthly/quarterly payments.