Why NAICOM, PenCom dialogue over 145.05 annuity transfer deal failed

The face-off between two major sectors of the economy, the National Insurance Commission (NAICOM), and National Pension Commission (PenCom), deepened last week, over the directive given to life insurers to transfer annuity assets in their fund to Pension Fund Custodians (PFCs), The Guardian has learnt.

A meeting, which was initiated by NAICOM, which was meant to provide an avenue for the regulators to resolve the issue that had raised worry amongst life insurance operators, was deadlocked.

The Guardian gathered that the leadership of the Nigerian Insurers Association (NIA), the umbrella body of insurance underwriters were not invited to the meeting.

The Director-General of the Association, Sunday Thomas, said: “We have not been invited to the meeting, but we wait for the outcome of their meeting.”

PenCom, had early this month, 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 PFCs is to ensure consistency with Pension Reform Act (PRA) 2014, and strengthen the processing of administration of retirement benefits.

A circular entitled: Strengthening the Administration of Retirement Benefits under the Pension Reform Act (PRA) 2014, with the reference number, PENCOM/INSP/CIR/TECH/16/17, was issued on November 3, 2016, to pension fund administrators and Custodians. In the circular signed by its Head, Surveillance Department, Muhammad Umar, PENCOM 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/custody to the PFC of their choice.