PenCom To Sanction PFAs For Refusing Retirees Annuity
The National Pension Commission has said it will sanction Pension Fund Administrators that refuse to approve annuity for retirees who are collecting pensions to them under the Programmed Withdrawal.
It stated this in a circular entitled, ‘Procedure for programming RSA balances of retiree already on programmed withdrawal exercising their rights to transfer to retiree life annuity’, to all pension fund operators.
The circular which was obtained on Thursday was signed by the Head, Surveillance Department, PenCom, Ehimeme Ohioma.
Pencom stated, “PFAs should note that appropriate sanction would be imposed for violation of the provisions of this circular.
“PFAs are required to submit monthly returns to the commission on all RLA rejection, on or before the 10th working day of the preceding month using the attached specimen format.”
Annuity is the monthly pensions paid to retirees under the Contributory Pension Scheme by life insurance companies, while programmed withdrawal is the monthly pensions paid by the PFAs.
PenCom said its attention had been drawn to the practice of some PFAs rejection of provisional Retiree Life Annuity agreement presented by retirees already on programmed withdrawal seeking to transfer to retiree life annuity as the preferred mode of retirement.
It directed the PFAs to re-programme the current RSA balances of retirees on PW who choose to transfer to RLA using stated procedures.
The commission, “PFAs should issue the current RSA balance to a PW retiree seeking to transfer to RLA to obtain quotation from a life insurance company of his choice.
“PFAs should re-programme retiree’s RSA using the present RSA balance, current age, gender.”
It explained that the annual total emolument provided as at retirement should still be adopted and no provision should be made for lump sum and pension arrears.
PenCom said provision should be made for one-month pension buffer to avoid gap in pension payout.
It stated, “The proposed annuity value should at least be within the range of the minimum and maximum pension as determined on the PW template or higher than the maximum pension.”