The National Pension Commission (PenCom) has been urged to critically revisit and reexamine Life Annuity product design structure in the ongoing Contributory Pension Scheme to build sustainable standard of living for the pensioners especially in the present period of hardship facing the country.
This was stated by Actuarial scientist and chartered Insurers, Dr Prius Apere.
Apere who is also Chairman Anchor Actuarial Services Limited, said pensioners in Nigeria were in dare need to have a sustainable standard of living at retirement.
He noted that the provision of regular enhanced Pension by PENCOM for the retirees under the Programme Withdrawal system of retirement benefit payment was a step in the right direction pending the implementation of Guaranteed Minimum Pension (GMP).
He however, said the provision of Enhanced Pension for Life Annuity pensioners, which was under the control of NAICOM, would not be achieved without revisiting the current Life Annuity product design.
According to Apere, there had been a delay in the implementation of the guaranteed minimum pension (GMP) leading to retirees’ inability to have sustainable standard of living at retirement.
He said this could be considered as the main reason for PENCOM’s attention being drawn to the clamouring for periodic enhancement of the pension for retirees on Programmed Withdrawal (PW) under the CPS” using the surpluses generated from the return on investment in their Retirement Savings Account (RSA).
“PENCOM’s framework on Enhanced Pension (EP) and the addendum dated 3rd October 2018 state that PFAs shall continue paying current pensions to Programme Withdrawal retirees that have insufficient growth [in their RSAs] to be considered for enhancement [and also those] that have fully exhausted their RSAs from the provisions made for Pension Protection Levy pending implementation of Minimum Guaranteed Pension (MGP)”, in pursuant to sections 82 (2) and 3(c).
He observed that PENCOM had approved the first and second tranches of enhancement of Pension for 2,916 and 52,186 Programme Withdrawal retirees which amounted to monthly enhanced pension of N13.16 million and N1.71 billion with effect from December 2017 and 2018 respectively, as revealed in PENCOM’s Annual Reports. The third tranche of enhancement of Pension has been approved to take effect from February 2023”, he said
He said the approval of regular enhancement of Pension for Programme Withdrawal retirees only has left Life Annuity (LA) retirees in a state of limbo. This is because the regulation of LA product and insurers has not resulted in enhancement of pension for LA retirees probably due to the current LA product design being approved for the Nigerian Pension Industry.
He said the enhancement of pension (EP) for PW retirees only could be seen as cushioning the effect of the non-implementation of GMP but that this is not a substitute for GMP for the following reasons.
