Matthew Otoijagha
The Director-General, Lagos State Pension Commission (LASPEC), Mrs. Folashade Onanuga, has said the state is not worried over recapitalizations by insurance companies.
According to her, the agreement between the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) to move about N500 billion annuity funds from the custody of insurance companies to Pension Fund Custodians (PFCs) has protected the funds against any insurance companies that may be unable to meet the new capital requirement by NAICOM.
She spoke on the sideline of the 16th Retirement Benefit Documentation Seminar for employees in Lagos.
Speaking on the recapitalization in the insurance industry, she said the state was not worried whether or not an insurance company offering annuity and holding funds will meet the new capital requirement of N18 billion, from N3 billion as composite insurance companies.
According to her, a meeting was held with chief executive officers of companies providing annuity cover for the state’s retirees. She listed FBN Insurance, ARM Life, AIICO Insurance, LASACO Assurance, Leadway Assurance, Custodian Insurance and African Alliance Insurance Plc. as firms the state met with.
She said: “NAICOM recently said General Insurance Business and Composite insurance companies must recapitalise to over N18 billion. The recapitalization of these companies will not affect annuity pension fund asset. For us at LASPEC, we have always been very careful in our administration of the state retirees’ fund. This is why we ensured that most of the insurance companies we have are composite.
“We had a meeting with all CEOs of the companies involved few days ago where we talked to one another and understood the situation. We wanted to know what effort that they are making to ensure that they are fully recapitalized. Fortunately for us, majority of the companies have the muscle to pull through. Yes, we have some that have some challenges, but we are not too worried because the funds are not with them.
“The circular by PenCom and NAICOM which directed that annuity funds be domiciled with the custodians is a very good thing for us. So the funds are not with the insurance companies,” she said.
PenCom had stated that it became necessary to compel the companies to transfer annuity funds in the kitty of insurance companies to PFCs due to the unethical and sometimes illegal dealings of insurers with the annuity funds of their customers.
It claimed that some insurance operators were allowing retirees to use their annuity funds as collateral for loans, which it said negated the pension law. As such, it explained that keeping all pension funds in the custody of the PFCs as specified by law would prevent unethical practices.