Experts in insurance and pension industry have identified various ways on how the current annuity fund arrangement could be managed and utilized for the good of all stakeholders even as they tasked the National Insurance Commission (NAICOM) and the National Pension Commission (PenCom) to harmonise strategies that will ensure proper management and utilization of the fund.
Speaking at the 4th BusinessToday Insurance & Pension Awards, in Lagos, the former Director-General, Lagos State Pension Commission (LASPEC), Mr. Rotimi Adekunle Hussain said the current arrangement by both NAICOM) and PenCom mandating Life Insurers to transfer over N167.84 billion annuity funds belonging to 34,312 annuitants to Pension Fund Custodians (PFCs) is a blessing to the insurance industry.
Mr. Hussain who was speaking at the theme paper: “The Current Annuity Fund Arrangement: A Threat or Blessing to Insurers”, said that the domiciliation of annuity fund with Pension Fund Custodians (PFCs) would discourage de-marketing of annuity and provide a level playing field for insurers and Pension Fund Administrators (PFAs) to expand the business.
He said the current arrangement would not only correct the public perception that insurers have full autonomy over annuity and build public confidence; attract more people into buying annuity and growing the fund, but lead to safety of pension funds.
Hussain who called on insurers to collaborate more with the National Pension Commission (PenCom) on development of rules and management of pension funds also enjoined insurers to leverage the opportunities to be created by the new arrangement and be aggressive, innovative in how they do their business.
Earlier in his paper, Group Managing Director, Royal Exchange Plc, Auwalu Muktari, expressed worries that with the new arrangement, life insurance companies will be losing over N150 billion to the Pension Fund Custodians (PFCs) which he said will impact negatively on the profit margin of life insurance firms.
He called on NAICOM to rise to the occasion is order to salvage the situation.
He said under the new guidelines recently issued by PenCom and NAICOM, it is mandated that annuity policies issued by all insurance firms will be transferred to Pension Fund Custodians (PFCs) of their choice.
Mr. Muktari who was represented at the event by the Managing Director, Royal Exchange Prudential Life Plc, Mr. Olawale Banmore, said with the new arrangement 34, 312 annuitants with their funds amounting to N167.84 billion will be leaving the insurance industry to PFCs of their choice.
He said with the new arrangement it means that the insurance industry will be losing over N150 billion to the PFCs, as they will be the custodians of the annuity funds.
In his remarks, the special guest and winner of the BusinessToday’s 2016 Excellence Award, the Honourable Commissioner, Ministry of Establishments, Training and Pensions, Lagos State, Dr. Benson Oke Akintola enjoined the stakeholders in the insurance and pension industry to ensure proper management and utilization of the funds.
“I wish to add that Section 7 of the Lagos State Contributory Pension Scheme Law of 2007 recognises annuities as one of the investment options to which retirement savings account can be put.
“From a social welfare governance perspective, annuities represent a responsible and effective tool that ensures the availability of funds to pensioners in a regular and prudent manner. I call on all stakeholders in the insurance and pension industry to embrace and utilize all tools that promote effective management of the funds available for pension purposes,” he said.