The National Pension Commission (PenCom) is closely monitoring the Tier-Based Minimum Solvency Capital (TBMSC) introduced by the National Insurance Commission (NAICOM) to ensure the safety of pension annuity business presently in the hands of some Life Insurers.
A source at the PenCom explained that whilst the pension regulator monitors the TBMSC, it is also working closely with NAICOM to ensure the policy does not have negative impact on pension annuity.
According to PenCom, about N259.58 billion has been transferred to the insurance industry in exchange for the monthly annuity of N2. 54 billion paid to 51,819 retirees, as at 31 March 2018.
The insurance regulator has said under the TBMSC, only tier-1 life companies which must have N6 billion minimum solvency capital will underwrite annuity business.
It maintained that in case of a solvency assessment re-categorizing a life insurer below Tier 1, the life insurer shall be required to commence transfer of its Annuity portfolio not later than six months from October 1, 2018, to another qualified Life insurer with the approval of the Commission and advice to the PenCom.
Industry observers who raised concern over the transfer process called on NAICOM to ensure that the process does not affect the monthly payment of annuitants. According to them, the transition should be seamless, as annuitants would not tolerate any distortion on the payment of their monthly pension.
Director, Centre for Pension Right Advocacy, Ivor Takor, stated that NAICOM should never transfer annuity portfolio, but should allow Life Insurers that may not qualify for the new regime to retain their annuitants until they exit, due to contractual agreements they have sealed.
He stressed that qualified companies should take in new annuitants, as observed in the pension industry where those closed to retirement where not considered for the contributory pension scheme. Takor called on NAICOM never to transfer annuitants without their consent, adding that the rights of the annuitants should be respected.