There is currently a disagreement of opinion between the National Pension Commission (PenCom), Insurance companies and the National Insurance Commission (NAICOM) over a recent circular by PenCom demanding that life insurance companies to transfer about N145.05 billion Annuity fund in their possession to Pension Fund Custodians (PFCs).
As for PenCom, it alleges that the action becomes necessary due to the unethical and sometimes illegal dealing of insurers with the annuity funds of their customers. PenCom alleged that some insurance operators were allowing retirees to use their annuity fund as collateral for loans, which according to it, negates the pension law. As such, it believes that keeping all pension funds are kept in the custody of the Pension Fund Custodians as specified by law, hence, guiding against unethical practices.
Insurance companies are seriously bemoaning the circular as they see it as a way to stifle them out of business. Already, according to Leadership News, they claim that some overzealous are causing a serious de-marketing of Annuity Option. Thus, they believe that this recent instruction will only serve to tilt business further in the favor of the PFAs.
NAICOM’s discomfort over the matter stems from the cold shoulder given it by PenCom regarding the matter. According to NAICOM, they were not even informed of the decision before its announcement, let alone discuss it. However, Leadership News reports that NAICOM is planning a meeting with PenCom to iron out the issue, as the regulator felt PenCom ought to have earlier discussed the matter with it before sending out circular to the industry.
It is hoped that a fair resolution of the matter comes to the fore sooner rather than later in order to ensure safety and trust in the insurance and pensions systems.