Life insurance operators were robbed over N10 billion by the crisis which hit annuity business last year, it has been reliably gathered.
The operators were denied annuity premium for the first quarter of 2017 by the National Pension Commission (PenCom) due to the crisis. According to PenCom, no annuity request was approved during the quarter as life insurance companies were still in the process of opening operational accounts with Pension Fund Administrators (PFCs).
PenCom noted that however, approval was granted for additional lump sum payment of N55,63 million to existing retirees under the annuity retirement plan, adding that the amount brought the total lump sum paid retirees to N47.09 billion.
Investigations showed that before the crisis, PenCom in first quarter 2016, approved a total of 3,288 applications for annuity retirement plan and the 3,288 retirees paid annuity premium of N15.44 billion.
In the second quarter 2016, approval was granted for 2,511 retirees who bought annuity and paid premium of N12.05 billion and in the third quarter, 2,181 retirees paid annuity premium of N10.75 billion to insurers.
According to PenCom, after the embargo was lifted, it approved a total of 5,243 applications for annuity plan in third quarter 2017, and the 5,243 retirees paid annuity premium of N27.74 billion to life insurance companies.
It relevant to state here that PenCom, had in November 2016, mandated life insurers to stop annuity business for three months and within the period transfer their annuity assets to PFCs. A decision NAICOM and insurance operators are not comfortable with.
According to PenCom the decision to move annuity assets from life insurers to PFCs is to ensure consistency with Pension Reform Act (PRA) 2014 and strengthen the processing of administration of retirement benefits.
According to a circular entitled: Strengthening the Administration of Retirement Benefits under the Pension Reform Act (PRA) 2014, with reference number PENCOM/INSP/CIR/TECH/16/17, issued on November 3, 2016, to pension fund administrators and Custodians and signed by its Head, Surveillance Department, Muhammad Umar, the pension regulator noted that in line with the PRA 2014, it resolved that the custody of retiree life annuity shall henceforth, be domiciled with PFCs as provided for in Section 56 of the pension act.
PenCom mandated all life insurance companies currently providing life annuity for retirees under the Contributory Pension Scheme (CPS) to open an operational account jointly with a PFC of their choice and advice the commission.
It maintained that all life insurance companies currently providing retiree life annuity under the CPS should transfer the corresponding assets in their possession or custody to the PFC of their choice.
The commission also noted that the approval of new request for annuity should be put on hold with immediate effect, until life insurance companies meet the custody and transfer conditions.
PenCom said life insurance companies are required to open an account with the custodian of their choice and also execute custodial service agreement that shall state the terms and conditions of the contract between the parties.