The directive by the Federal Government for life insurance companies to move life annuity funds into the custody of Pension Fund Custodians has, again, enhanced the outlook of the pension asset bankers.
The latest report by the National Insurance Commission (NAICOM) indicated that the fund had hit N322.91 billion as at second quarter of the current year.
The fund’s steady growth is predicated on renewed public confidence in the nation’s life insurance segment as it has increased by 17.46 per cent from N274.91 billion as at end of Q4, 2018 to N322.91 billion as at the end of Q2, 2019.
According to details obtained from NAICOM, within the same period, the cumulative total payouts stood at N122.09 billion.
The total pension assets under the Contributory Pension Scheme (CPS) currently stands at N9.58 trillion with a little over eight million workers as contributors, according to a recent disclosure by the National Pension Commission (PenCom).
Retiree life annuity is an insurance product and one of the available retirement benefit options for retirees, which can be purchased from a life insurance companies licensed by NAICOM and authorised to sell annuity under the regulation.
The retiree life annuity market has been in existence since the advent of the CPS and it has so far recorded 73,554 contracts purchased for a total premium of N341.61 billion as at end of Q2, 2019. This represents 13.02 per cent and 6.21 per cent growth in count and volume, respectively in 2019 from end of Q4, 2018.
According to the details, the year-on-year (YoY) growth during the last three years for annuity business has averaged 34.28 per cent and 35.12 per cent in count and volume respectively, while the fund portfolio growth has averaged 27.46 per cent, notwithstanding the RLA payouts being cumulative total payments of N122.09 billion as at end of Q2, 2019.
New Telegraph recalled that in 2016, the Nigerian Insurers’ Association (NIA) engaged a South African-based Actuarial firm to help review annuity business and align it with current global market practices. The review and other assignments were concluded in 2017.
“In its effort at promoting good order in the management of life annuity business in our market, the NIA has concluded plans to engage a South African-based Actuarial firm to assist the Association review and advice on the current market practice leveraging global practices,” Eddie Efekoha, the chairman of NIA then, had said.
This was after PenCom directed that all annuity funds in the custody of life insurance firms be domiciled with Pension Fund Custodians (PFCs), a development that did not go down well with the underwriters.
Speaking on the feud then, which led to an initial transfer of over N100 billion to the PFCs, Efekoha advised NAICOM and PenCom to address the public and correct the bad impression created by the circular.
According to PenCom, however, the circular was issued to curb unethical practices by some life insurers, who have been wooing retirees with loans, a development that contradicts the pension law.
It was gathered that PenCom took the decision to ensure that all pension funds are kept in the custody of the PFCs as specified by the law.
A source at NIA had, however, condemned the step taken by PenCom, stressing that proper consultations were not reached before the circular was issued.
He noted that PenCom, as a regulator, should have properly deliberated the issue with the insurance regulators before issuing the circular.
He said the development would make the public believe there is an unhealthy relationship between both regulators.
However, years after the cold war, the relationship between the two regulators has become cordial with both supervising their agencies as stipulated by law.