The Nation Newspaper

Tag: PFAs

  • ‘Life insurance operators, PFAs help retirees on best retirement option’

    Licensed life insurance companies providing Life Annuity and the Pension Fund Administrators (PFAs) providing Programme Withdrawal to retirees as the two retirement options under the Contributory Pension Scheme (CPS), are working to ensure they get the right plan for retirement.

    The Managing Director, LASACO Life, Dimeji Olona, who said this, explained that Section 4 of the PRA allows an employee to use the amount accumulated in his Retirement Savings Account (RSA) to buy either programmed withdrawal or life annuity at retirement, or attaining the age of 50 years, whichever is the latter.

    Olona said the contributor is also allowed to take a lump sum at age 50, or at retirement whichever is the latter from the RSA balance, provided that the amount left after the withdrawal shall be sufficient to procure Annuity for life, or fund Programme Withdrawals that will provide an amount not less than 50 per cent of his annual remuneration as at the date of his retirement.

    He praised the efforts of the regulators, the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom), for ensuring that the retirees are well protected.

    He said the Lagos State Pension Commission (LASPEC) has, on its part, also ensured that the PFAs and insurers compete in a healthy environment.

    He affirmed that both the PFAs and Annuity providers are partners in progress as there cannot be an effective administration of annuity without the involvement of PFAs who are supposed to accumulate the fund to use in purchasing the annuity for life.

    Olona explained that annuity is a series of payments made at equal intervals of time in conservation of a lump sum, or a regular contribution made over a pre-defined period.

    He said: “We have different types of annuity, but the type being made popular in Nigeria through the Pension Reform Act (PRA) 2004, is called Immediate Annuity.

    “The Programmed Withdrawal is provided by the PFAs, while the annuity for life is provided by licensed life insurance companies in Nigeria. The Programmed Withdrawal and Annuity are two distinct options available to the retirees. Both options, although have clearly distinct features, have been carefully chosen by the regulators to protect the interest of the retirees.

    “The process of selecting the providers of either option is also stringent to ensure that only the companies that are adjudged by the regulators to be capable are licensed.”

    Olona said some of the advantages of annuity are: “That the product is used to take care of the basic fear of an intending retiree at risk of outliving his income which is called longevity risk. This risk is borne by the insurance company if the retiree lives very long. For instance, a retiree that leaves service at the age of 60 and lives up to perhaps 90 years can buy annuity for life which can be used to solve the financial burden at old age.

    “Life Annuity authorised under the PRA 2004, is guaranteed for 10 years but if the annuitant dies before 10 years, the balance would be paid to the named beneficiary. If the annuitant survives the guaranteed period, the annuity is payable thereafter as long as the annuitant lives.”

    Another advantage, Olona mentioned, is that the investment risk is borne by the annuity provider and not the annuitant, as a guaranteed sum is given to him or her on a regular basis in spite of harsh investment climate that might be experienced by the company.

    He said PenCom and NAICOM collaborated in 2006 to jointly regulate Life Annuity and Group Life insurance policy under the CPS. Both regulations have been implemented for six years and three years.

  • ‘Life insurance operators, PFAs help retirees on best retirement option’

    Licensed life insurance companies providing Life Annuity and the Pension Fund Administrators (PFAs) providing Programme Withdrawal to retirees as the two retirement options under the Contributory Pension Scheme (CPS), are working to ensure they get the right plan for retirement.

    The Managing Director, LASACO Life, Dimeji Olona, who said this, explained that Section 4 of the PRA allows an employee to use the amount accumulated in his Retirement Savings Account (RSA) to buy either programmed withdrawal or life annuity at retirement, or attaining the age of 50 years, whichever is the latter.

    Olona said the contributor is also allowed to take a lump sum at age 50, or at retirement whichever is the latter from the RSA balance, provided that the amount left after the withdrawal shall be sufficient to procure Annuity for life, or fund Programme Withdrawals that will provide an amount not less than 50 per cent of his annual remuneration as at the date of his retirement.

    He praised the efforts of the regulators, the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom), for ensuring that the retirees are well protected.

    He said the Lagos State Pension Commission (LASPEC) has, on its part, also ensured that the PFAs and insurers compete in a healthy environment.

    He affirmed that both the PFAs and Annuity providers are partners in progress as there cannot be an effective administration of annuity without the involvement of PFAs who are supposed to accumulate the fund to use in purchasing the annuity for life.

    Olona explained that annuity is a series of payments made at equal intervals of time in conservation of a lump sum, or a regular contribution made over a pre-defined period.

    He said: “We have different types of annuity, but the type being made popular in Nigeria through the Pension Reform Act (PRA) 2004, is called Immediate Annuity.

    “The Programmed Withdrawal is provided by the PFAs, while the annuity for life is provided by licensed life insurance companies in Nigeria. The Programmed Withdrawal and Annuity are two distinct options available to the retirees. Both options, although have clearly distinct features, have been carefully chosen by the regulators to protect the interest of the retirees.

    “The process of selecting the providers of either option is also stringent to ensure that only the companies that are adjudged by the regulators to be capable are licensed.”

    Olona said some of the advantages of annuity are: “That the product is used to take care of the basic fear of an intending retiree at risk of outliving his income which is called longevity risk. This risk is borne by the insurance company if the retiree lives very long. For instance, a retiree that leaves service at the age of 60 and lives up to perhaps 90 years can buy annuity for life which can be used to solve the financial burden at old age.

    “Life Annuity authorised under the PRA 2004, is guaranteed for 10 years but if the annuitant dies before 10 years, the balance would be paid to the named beneficiary. If the annuitant survives the guaranteed period, the annuity is payable thereafter as long as the annuitant lives.”

    Another advantage, Olona mentioned, is that the investment risk is borne by the annuity provider and not the annuitant, as a guaranteed sum is given to him or her on a regular basis in spite of harsh investment climate that might be experienced by the company.

    He said PenCom and NAICOM collaborated in 2006 to jointly regulate Life Annuity and Group Life insurance policy under the CPS. Both regulations have been implemented for six years and three years.

  • Lagos holds pre-retirement seminar Thursday

    The Lagos State Pension Commission (LASPEC) is organising a pre-retirement seminar for about 1,200 workers, who will quit the service between January and June, this year, its Director-General, Lagos State Pension Commission, Mr. Rotimi Adekunle Hussain, has said.

    He said the event will take place at the Secretariat, Alausa on Thursday.

    According to him, the seminar organised in collaboration with the state’s approved Pension Fund Administrators (PFAs) and insurance firms, is to further broaden the knowledge of the worers on how to prepare for retirement and access their benefits under the Contributory Pension Scheme (CPS).

    He said: “The Pre-Retirement seminar programme is aimed at assisting retirees to adequately prepare for their physical, emotional and financial well-being in retirement as well as afford them the benefit of being in a better position and frame of mind to build a comfortable and rewarding life in retirement.”

     

  • Private sector employers withhold N13b pension

    Private sector employers withhold N13b pension

    No fewer than 335 employers in the private sector failed to remit N13.3 billion pension deducted from their workers’ salaries to their Pension Fund Administrators (PFAs) in the second quarter of last year.

    Acting Director-General, National Pension Commission (PenCom), Mrs Chinelo Anohu-Amazu, made this known in her report on the ‘Recovery of Outstanding Pension Contributions and Interest Penalty from Defaulting Employers’.

    She said the 70 Recovery Agents (RAs) appointed by the commission made the discovery.

    According to her, PenCom further granted approval to the RAs to serve demand notices on 103 employers for outstanding pension contributions and interest penalty, which amounted to N7.28 billion.

    She said the cases of the remaining 232 were not accepted because of errors in the computations submitted by the RAs.

    She said: “The cases on the remaining 232 employers were rejected due to errors in the computations submitted by the RAs. The RAs had since been advised to make corrections and resubmit the computations to the Commission.

    “Consequent upon the issuance of demand notices to erring employers whose liabilities were established by the RAs, some of the employers have remitted their outstanding pension contributions and interest penalties.

    “In addition, the RAs had recovered N140.89 million during the quarter under review, which cumulatively brought the total amount so far recovered to N335.84 million and an interest penalty of N31.04 million as at June 2013.”

    Mrs Anohu-Amazu said the body intends to prosecute the employers that fail to remit the outstanding pensions and interest penalty.

    To recover all pension contributions being withheld by employers, PenCom appointed 172 RAs last year.

    Section 11.7 of the Pension Reform Act, 2004, states: “Any employer who fails to remit the contributions within the time prescribed in Subsection (5) (b) of this section shall in addition to making the remittance already due be liable to a penalty to be stipulated by the commission provided that the penalty shall not be less than two per cent of the total contribution that remains unpaid for each month or part of each month the default continues and the amount of the penalty shall be recoverable as a debt owing to the employees retirement savings account as the case may be.”

  • Private sector leads in pension contributions

    Private sector leads in pension contributions

    The private sector has surpassed the public sector in pension contributions, FBN Capital report has shown.

    It indicated that the private sector contributes about 60 per cent of the N3.4 trillion pension assets under the management of Pension Fund Administrators (PFAs).

    The research firm said data released by the National Pension Commission (PenCom) showed that as at end of March, this year (when pension assets were N3 trillion), the private sector contributed N1.8 trillion to the scheme. Also, the public sector’s contribution from ministries, departments and agencies (MDAs) of the federal and some state governments, was N1.2 trillion. This, it said, was a marked change from its composition in 2004 when the Act kicked off.

    FBN Capital said the increase to N3.4 trillion as at the end of May was largely due to the filing in of 12 states into the contributory pension scheme, although only six states had collected and remitted contributions in compliance with the provisions of the Pension Reform Act (PRA) 2004.

    It said the number of registered contributors has grown to 5.5 million with an average monthly contribution of N30 billion.

    “Given that only seven per cent of the nation’s 80 million workforce has joined the scheme, there exists a huge potential for growth in the coming years,” it said.