PenCom, NAICOM Says New Life Annuity rules will end demarketing

 

By Emmanuel Daudu/Abuja

The National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) in addressing challenges affecting the marketing of Retiree Life Annuity (RLA) and Programmed Withdrawal (PW) will avert demarketing in the two subsectors, the Executive Director, Centre For Pension Right Advocacy, Ivor Takor, disclosed this.

He made this known in a report entitled: “Pension Reform Act 2014: The Revised Regulation on Retiree Life Annuit.’’

Takor, who applauded PenCom and NAICOM for the rules, stated that the steps would help promote both businesses and efficient transactions.

In his words, “As a member of the Fola Adeola-led Pension Reform Committee, whose work ushered in the CPS through the PRA 2004, I was quietly happy that annuity was being sold to employees as it will give them an option, which was the spirit behind the provisions of Section 7(1) (b) and (c).

“Section 7(1) provides that a holder of a Retirement Savings Account (RSA) shall, upon retirement or attaining the age of 50 years, whichever is later, utilise the amount credited to his retirement savings account for withdrawal of a lump sum from the total amount credited to his RSA provided that the amount left after the lump sum withdrawal shall be sufficient to procure a programmed fund withdrawals or annuity for life in accordance with extant guidelines by PenCom, from time to time; Programmed monthly or quarterly withdrawals calculated on the basis of an expected life span; and annuity for life purchased from a life insurance company licensed by NAICOM with monthly or quarterly payments in line with guidelines jointly issued by PenCom and NAICOM.’’

Takor said he was, however, worried about the misinformation by marketers on the life span of PW.

According to him, the challenge of implementing Section 7(1)(b) and (c) has to do with the marketing and de-marketing of the PW and Annuity by operators and their agents.

He noted that PFAs, who provide PW, are in a vantage position over life insurance firms that provide annuity.

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