The National Pension Commission (PenCom) has warned that any Pension Fund Administrator (PFA) caught repdening retirees of the right to change their models would be sanctioned.
According to the provisions of Section 7(1) of the Pension Reform Act (PRA) 2014, retirees are given two retirement benefit modes – Programmed Withdrawal (PW) and Retiree Life Annuity (RLA), which they are required to choose from payments.
Techeconomy gathered that the PW is an income paid by a PFA to a retiree monthly or quarterly while, RLA is a stream of income purchased from a life insurance company with the RSA balance under the CPS as a premium.
And of course, the RLA regulations are issued by the PenCom and the National Insurance Commission (NAICOM).
This medium also understands that under PW, the cash in the Retirement Savings Account (RSA) is re-invested by the PFA to generate more income. Upon his death, his beneficiary is paid the balance.
Also there a term called Life Annuity which provides a guaranteed periodic pension to a retiree in his or her life after retirement. Annuity is guaranteed for 10 years. If the retiree dies within the first 10 years of retirement, the monthly annuity will be paid to his beneficiary for the balance up to 10 years.
Meanwhile, PenCom, in its latest statement entitled: “Procedure for Reprogramming RSA Balances of Retiree Already on Programmed Withdrawal Exercising Their Rights to Transfer to Retiree Life Annuity”
And based on the statement, it perceived that some PFAs are reluctant and create bottlenecks to reject requests from retirees to transfer their fund to an insurance firm for life annuity.
The statement read: “PFAs should issue the RSA balance to a PW retiree seeking to transfer to RLA to obtain quotation from a life insurance company of his/her choice. PFAs should re-programme retiree’s RSA using the present RSA balance, current age, gender.
“Please note that the Annual Total Emolument (ATE) provided as at retirement should still be adopted. No provision shall be made for lumpsum and pension arrears; and provision shall be made for one-month pension buffer to avoid
“The proposed annuity value should at best be within the range of the minimum and maximum pension as determine on the PW template, higher than the maximum pension; PFAs should note that appropriate sanction would be imposed for violator of the provisions of this circular; and PFAs are required to submit monthly returns to the Commission or alt R LA rejection, on or before the 10′ working day of the preceding month using the attached specimen format.’’