NAICOM, PENCOM Sets To Issue New Rules On Annuity Operations

Commissioner for Insurance, Mohammed Kari

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Both National Insurance Commission (NAICOM )and National Pension Commission (PenCom) are set to release the new modalities that they have being puting together documents of harmonization of pension and insurance regulatory operations over the months will regulate the provision of life annuity for retirees under the Contributory Pension Scheme.

Amehnews recall that trouble started when PenCom issued a circular in November 2016, directing life insurance companies to transfer their annuity asset holdings to Pension Fund Custodians (PFCs), citing Section 56 of Pension Reform Act 2014 that requires the life insurance underwriters to transfer their RLA assets to licensed PFCs.

The insurers were also required by the circular to suspend approving new requests for annuity pending the transfer of assets to PFCs.
But NAICOM disagreed with PenCom on the grounds that annuity is a product offered by Life Insurance companies that are directly under its supervision.

The Commissioner for Insurance, Alhaji Mohammed Kari, who disclosed this in an interview, said that the two regulators had a four day retreat, which ended on Friday, aimed at releasing the guidelines on life annuity.

He said, “We had a four day retreat to make sure that we release the life annuity document that will be in the interest of all the parties involved. It is not for the operators to decide but the regulators to decide.”

He said, “We had a four day retreat to make sure that we release the life annuity document that will be in the interest of all the parties involved. It is not for the operators to decide but the regulators to decide.”

According to the PRA 2014, a retiree can access his pension when he has reached the age of 50 and is no longer under paid employment.

The PFAs sell programmed withdrawal to retirees under the pension scheme, while insurers sell life annuity.

After being paid a lump sum, the retiree must choose either programmed withdrawal or life annuity as a means to be earning the monthly pension.

In November 2016, PenCom issued a circular, instructing insurers licensed to provide life annuity under the Pension Reform Act 2014 to transfer the pension funds in their custody to the Pension Fund Custodians before pensioners would be allowed to take annuity at retirement.

Earlier this year, NAICOM had released a statement that the commission and PenCom met in December last year to resolve the issue and strengthen the administration of life annuity as a mode of retirement benefit under the PRA 2014.

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While the issue was not resolved, the Minister of Finance, Kemi Adeosun, had to intervene.

This led the two regulators to issue a joint circular on the administration of life annuity for pensioners in March.

The circular stated that both NAICOM and PenCom were reviewing the regulation on retiree life annuity which would be jointly released to the public in compliance with the PRA 2014 within three months of the notice.

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