By Rosemary Onuoha

Some operators in the insurance sector have called on their colleagues to desist from mixing up the funds from their regular business with funds from the annuity business, noting that such act is unprofessional.

Managing Director, Standard Life Assurance Limited, Austin Enajemo warned his colleagues to desist from such unscrupulous actions.

According to Enajemo, regulation demands that the funds should not be merged; hence operators engaging in such unholy act should desist from such and obey regulation by separating the funds.

Invariable, Enajemo called on workers to the contributory pension scheme to embrace life insurance companies that comply with regulation when they want to get annuity plan.

According to him, “ Section 4 subsection ( I) of the Pension Act states that a holder of a retirement savings account upon retirement or attaining the age of 50 years, whichever is later, shall utilise the balance standing to the credit of his retirement savings account for the following benefits, (a) programmed monthly or quarterly withdrawals calculated on the basis of an expected life span; (b) annuity for life purchased from a life insurance company licensed by the National Insurance Commission with monthly or quarterly payments; and a lump sum from the balance standing to the credit of his retirement savings account: provided that the amount left after that lump sum withdrawal shall be sufficient to procure an annuity or fund programmed withdrawals that will produce an amount not less than 50 per cent of his annual remuneration as at the date of his retirement.”

Meanwhile pension fund operators are set to prevent insurance companies with relatively low capital base from providing annuity for retirees even as they are all 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.

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.

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.