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N145bn Annuity Fund Controversy: Life Insurers to Open Operational Account With PFCs




By Amarachi Onyebeke
The Cold war between life insurance underwriters and Pension Fund Administrators over control of N145.05 retirees’ annuity fund has been rested with a directive that Life Insurance companies currently providing life annuity for retirees under the Contributory Pension Scheme (CPS) should open Operational Accounts with Pension Fund Custodians (PFCs) of their choice.
This is contained in a joint statement issued today( Thursday) by both regulatory bodies of insurance sector, the National Insurance Commission( NAICOM) and its Pension sector counterpart, the National PenSionCommission( PenCom).

The two regulators, which in the joint statement 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 said operators should obey the directive
pending the time the guideline will be ready for public consumption.

The two bodies, which were recently summoned to a round table peace talk on the issue by the Minister of Finance Kemi Adeosun,had after the meeting with the minister, promised to
come out today withy joint statement that will settle the annuity fund control controversy.

In the joint statement, the two regulators,also stated that all new annuity purchased or being processed should be domiciled in the dedicated account with PFCs.

It was also stated that treatment of all existing retirees’ life annuity funds and assets would be dealt with upon issuance of the Joint Regulations referred to above.
They also agreed that NAICOM,should ensure that Life Insurance companies, comply with the above requirements

They also stated that processing and approvals of new retiree life annuity requests should continue forthwith while Pension Fund Administrators (PFAs),should resume the processing of new annuity requests for retirees and forward same to PenCom for necessary approval without delay.

PenCom was also charged with the responsibility of ensuring that PFAs,transfer all approved premium for retiree Life Annuity to the Operational Accounts opened by the Life Insurance Companies with PFCs.

The National Pension Commission ( PenCom) had November last year issued a directive to life insurance underwriters ordering them to within three months surrender N145.05 billion annuity assets in their custody to Pension Fund Custodians.

But the law establishing the Contributory Pension Scheme( CPS) gives retirees the option
to choose between buying an annuity with part of their pension savings from a life insurance company after retirement or take programmed withdrawal of the pension savings with a PFA.

While annuity fund is in custody of life insurance underwriters,programme withdrawal asset is with PFAs who transfer the same to Pension Fund Custodians( PFCs)for investments.

Since then there has been Cold War between operators of the two sectors as insurance underwriters vowed to fight the development with the last drop of their blood, while pension fund Administrators and custodians had insisted that the directive was in accordance with the law and must be obeyed.

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