By Rosemary Onuoha
As part of efforts to ensure that retirees enjoy a comfortable retirement, pension operators in the country are set to prevent insurance companies with relatively low capital base from providing annuity for retirees.

The pension operators are also out to ensure that pension funds remitted to insurance companies for the provision of annuity for retirees are not merged with their core operational funds but kept separately.

The move, according to them is to check incidents of non-payment of annuity claims at maturity.

Under the Contributory Pension Scheme, at retirement, retirees are allowed the option of programmed withdrawal where they will be given an initial lump sum and subsequent monthly payment from their Retirement Savings Account (RSA) or payment of an initial lump sum while the rest will be used to purchase life policy known as annuity from an insurance company.

Mr. Dave Uduanu, Chairman of Pension Operators Forum said that only financially robust insurance companies should be allowed to engage in the provision of annuity for retirees under the contributory pension scheme.

At a workshop for business editors, finance, insurance and labour correspondents organised by the National Pension Commission (PenCom) in Enugu last week, Uduanu said that it is important that funds remitted to insurance companies for annuity be closely monitored and properly managed so that retirees will not lose their investment.

According to him, “It is important that annuities be closely monitored and the fund should not be mixed with other funds of insurance companies. A company with low capital base should not  be allowed to engage in the business of providing annuity because should there be issues with their capital base, retirees will suffer unduly.”

He stressed that there should be relationship between a company’s capital base and its provision of annuity because if an insurance company with a low capital base that provides annuity suffers erosion of capital, where will such company get money to service its annuity obligation.

“Annuity funds should be closely monitored, managed and safeguarded just the way pension funds are managed,” he said.

Meanwhile, National Pension Commission, PenCom,  said total pension assets at November, 2011, stood at N2.4 trillion, even as the Commission disclosed that over N 1.284 billion was used to service retirees’ benefits monthly.

It said  4.92 million Nigerians had registered  with the Scheme through the Pension Funds Administrators, PFAs,  as at November this year.

MR. Mohammed  Ahmad, Director-General, PenCom, noted that during the year under review, the Commission raised the capital requirements for PFAs from N150 million to N1 billion, of which the deadline is June 2012.

Represented by  Mr.  Manzuma Mamman,  Commissioner in charge of Administration, the Director-General said  “We have aggressively intensified our compliance mechanism by taking legal action against defaulting employers. The Bureau of Public Procurement (BPP) has continued to support the Industry by ensuring that service providers to the Federal government comply with the BPP Act with regards to the Pension reform Act 2004.”

According to Ahmad “The industry has continued to record modest achievements as 4.92 million Nigerians had registered on the Scheme as at November this year. There are currently about 40,794 retirees from the public and private sectors under the Contributory Pension Scheme who are collecting their monthly pensions either by programmed withdrawal or annuity.

They have collected over N 115.6 Billion as lump sum at the point of retirement and are collecting about N 1.284 billion as monthly pension. Additionally, assets worth N2.4 trillion have been accumulated as at November,2011.”