CPS: Retirees Pay N371.21bn to Life Insurance Firms


Ebere Nwoji
The National Pension Commission (PenCom) has said retirees from the public and private sectors had since the inception of the Contributory Pension Scheme (CPS) paid N371.21 billion premium to life insurance companies managing annuity accounts.

This was despite almost a year ban placed on life insurance firms from receiving annuity funds from retirees due to unhealthy completion breeding between insurance firms and Pension Fund Administrators(PFAs).

PenCom, in its 2019 second quarter report on quantum of premium paid to life insurance firms by retirees who preferred annuity plan to programmer withdrawal, said a total of 2,941 applications for retirement under life annuity was approved during the second quarter of 2019, bringing the total number of retirees receiving their retirement benefits through the annuity plan to 68,857 from inception.

The PRA 2004 amended in 2014, which established stated that the CPS allows retirees and contributors to the scheme to choose receiving their retirement plan through annuity plan or programmers’ withdrawal.

Those who preferred annuity would use their lump sum contributed funds to buy annuity plan from any life underwriting firm of their choice who in turn pays them retirement benefits for life.

PenCom in the report, noted that the 2,941 retirees received N4.68 billion as lump sum payment and paid premium of N17.53 billion to insurance companies and monthly annuity of N184.50 million, adding that this resulted in total lumps sum payment of N91.28 billion; premium of N371.21 billion and monthly annuity payments of N3.70 billion, at the end of the second quarter of 2019.

For retirees on Programmed Withdrawal (PW), the commission stated that the total number of retirees currently receiving their pensions under the programme increased by 3.81 per cent, from 214,538 as at the end of the first quarter 2019, to 222,712 as at the period under review.

It added that breakdown showed that 65.75 per cent of those that received pension under the PW were from the public sector, while retirees from the private sector accounted for the remaining 34.25 per cent.

PenCom, also noted that during 2019 second quarter, the sum of N 20.57 billion was paid to 8,174 retirees as lump sum and N 355.09 million as monthly programmed withdrawals.
It noted that from inception to June 2019, the sum of N580.05 billion has been paid as lump sum and the monthly Programmed Withdrawals amounted to N9.50 billion.