- PenCom Readmits Life Annuity as Retirement Option
The National Pension Commission has approved annuity as a payment option for retirees under the Contributory Pension Scheme.
In a circular, which was jointly signed by both PenCom and the National Insurance Commission, they notified the public and stakeholders in the insurance and pension industries that life annuity remained a mode of retirement benefit under the PRA 2014.
In the circular, they stated, “Specifically, both NAICOM and PenCom reaffirmed the existence of programmed withdrawal and life annuity as modes of payment of retirement benefits under the PRA 2014.”
The circular stated that both NAICOM and PenCom were currently reviewing the regulations on retirees’ life annuity, which would be jointly released to the public in compliance with the PRA 2014 within three months of this notice.
In the meantime, all life insurance companies currently providing life annuity for retirees under the CPS have been asked to open operational accounts with Pension Fund Custodians of their choice.
It stated that all new annuities purchased or being processed would be domiciled in the dedicated accounts with the PFCs and the treatment of existing retiree life annuity funds and assets would be dealt with upon issuance of the joint regulations.
In the circular, NAICOM were asked to ensure that life insurance companies complied with the requirements.
Early November 2016, PenCom issued a circular instructing life insurers licensed to provide annuity under the Pension Reform Act 2014 to transfer the pension funds in their custody to the PFCs before pensioners would be allowed to take annuity at retirement.
This led to the stoppage of annuity approval to retirees under the CPS since November 3, 2016.