The National Pension Commission (PenCom) has said that Retiree Life Annuity (RLA) fund, managed by life insurance companies recorded a marginal growth of 2.69 percent during the second quarter 2020.
The commission stated this in a recent report titled, “Retiree Life Annuity: An Overview of Q2, 2020,” published on its website.
“The RLA portfolio so far has recorded 83,917 contracts purchased for a total premium of N377 billion as at end of Q2, 2020. This depicts 2.69 per cent and 1.58 per cent growth in count and volume, respectively in Q2, 2020 from end of Q1, 2020.
“While the industry fund portfolio grew by 15.34 per cent to N463.1 billion as at the end of Q2, 2020,” it stated.
According to the commission, year-on-year growth of the annuity fund during the last three years for RLA business averaged 25.45 percent in volume, while RLA fund portfolio growth averaged 37.22 percent notwithstanding the RLA payouts made which it said stood at N167.2 billion as at the end of Q2, 2020.
The commission stated that the annuity payouts, premium receipts and portfolio fund balance depicted a clear representation with the fund balance which was to the tune of N463.1 billion, higher than the cumulative premium amounts received which was N376.58 billion.
It said further analysis of the periodical increments in the cumulative premium amounts received and RLA fund portfolio respectively, depicted that the growth rate for premium receipts was receding, adding that growth rate for the portfolio fund balance was volatile.
PenCom, attributed this to the volatility in interest rate.
The commission, said it approved a total of 2,357 applications for retirement under life annuity between July to September 2019, adding that the number of annuitants as at July 2019 was 68,857 and moved to 71,214 in September.
The pension industry regulator noted that the 2,357 retirees received N3.71 billion as lump sum payment and paid premium of N15.09 billion to insurance companies in exchange for monthly annuity of N159.22 million.
It said this resulted in total lumps sum payment of N94.99 billion, premium of N386.30 billion and monthly annuity receipts of N3.86 billion as at the end of third quarter, 2019.
The insurance sector, whose life business segment underwrites life annuity portfolio has much hope on the annuity with the industry regulator, the National Insurance Commission seeing the annuity business portfolio as the future of life business.
With this, the commissioner for insurance, Sunday Thomas, said he was determined to develop the business beginning with enhancing capacity for the human resources to man the business.
This led the commission into partnering the College of Insurance and Financial Management (CIFM) with the target of producing 100 actuarial analysts in the next five years, who would help to enhance the growth of insurance sector.
Thomas, noted that only a couple of insurance companies have an in-house actuaries, stressing that the professionals were needed to manage annuity business which was becoming quite significance and almost accounting to 35 to 40 per cent in the industry portfolio with a output of N11trillion.