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Retirees Pay N465bn Premiums On Annuity Plan To Insurance coverage Companies

Share this…FacebookPinterestTwitterLinkedin No fewer than 83,568 retirees, on the level of retirement, opted for Retiree Life Annuity (RLA) plan, therefore,…

By Staff , in Investments , at November 25, 2021

No fewer than 83,568 retirees, on the level of retirement, opted for Retiree Life Annuity (RLA) plan, therefore, paying a cumulative N464.53 billion premium to life insurance coverage firms within the nation, LEADERSHIP learnt.

Life annuity plan is an earnings bought from an permitted life insurance coverage firm which offers month-to-month or quarterly earnings to the retiree throughout his/her lifetime.

To this finish, investigation exhibits that, from 2004 when the Contributory Pension Scheme(CPS) grew to become operational, until December 31sr, 2020, the whole premium transferred by Pension Fund Directors(PFAs) on behalf of their prospects, amounted to 464.53billion.

In a current report from the Nationwide Pension Fee(PenCom) and made obtainable to LEADERSHIP, the whole variety of retirees who opted for annuity plan elevated from 74,805 in 2019 to 83,568 in 2020.

Additional breakdown exhibits that federal authorities retirees accounted for 49,368 (59.07 per cent), the States retirees accounted for 10,494 (12.56 per cent) whereas the non-public sector retirees accounted for 23,706 (28.3 per cent) of the retirees who opted for annuity on the expense of programmed withdrawal plan.

Stating that the cumulative month-to-month annuity being obtained by retirees from inception to December 31, 2020 was N4.62 billion, after the receipt of cumulative lump sum of N127.62 billion, PenCom stated, in 2020, 8,763 retirees who opted for Life Annuity obtained N25.92 billion as lump sum whereas N57.22 billion was paid as premium to insurance coverage firms in alternate for month-to-month Annuity receipts of N540 million.

Within the second quarter of 2021, nevertheless, the regulator granted approval to 1,708 retirees below the Retiree Life Annuity, including that, the whole lump sum of N4,586.16 million was permitted for cost to the retirees.

Talking on annuity, the managing director/CEO, Cecilia O. Osipitan, stated that life annuity is a stream of periodic funds that commences at a specified date, which is both the conventional retirement age or at 50 within the case of early retirement. The cost, she added, might both be month-to-month or quarterly relying on the retiree’s desire.

Osipitan defined that the advantages to incorporate; the continual circulation of standard earnings for the retiree, insulation from the dangers related to the funding of lump-sum advantages, structured administration of sources and the transference of the chance of diminution in belongings and doable failure of investments of retirees to insurance coverage firms which might be higher geared up to handle such dangers.

“Insurance coverage stays probably the most dependable bedrock of our existence and cultivating the tradition of insurance coverage can by no means be over emphasised. There’s a have to name for a paradigm shift by means of efficient sensitisation of the insuring public as it is rather necessary to imbibe the tradition of getting acceptable insurance coverage cowl to guard our belongings and lives in case of any eventuality,” she identified.

Earlier, the commissioner for Insurance coverage, Sunday Thomas, expressed optimism {that a} substantial a part of the N13 trillion pension belongings will discover its manner into the insurance coverage portfolio.

NAICOM, he stated, is working assiduously to place in place measures to guard the anticipated funds, which knowledgeable the transfer to coach and breed actuarial analysts, who will assist measure and handle insurance coverage related dangers.

“Annuity requires day-to-day measurement and administration of its actions. As I communicate with you proper now, annuity accounts for about 40 per cent of our portfolio. That truly requires our consideration,” he identified.

The Retiree Life Annuity (RLA) is an insurance coverage product and one of many obtainable retirement profit choices for retirees. The product may be bought from a Life Insurance coverage Firm licensed by the NAICOM and authorised to promote RLA below the regulation of retiree life annuity.

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