Pension Fund Administrators (PFAs) that refuse to approve annuity for retirees who collect pensions through them under the Programmed Withdrawal will henceforth be penalised, the National Pension Commission (PenCom) has said.
Annuity refers to monthly pension payments under the Contributory Pension Scheme by life insurance companies, while Programmed Withdrawal (PW) is the monthly pensions paid by PFAs.
It made the declaration in a circular issued on Thursday and titled, “Procedure for Programming RSA Balances of Retirees already on Programmed Withdrawal Exercising their Rights to Transfer to Retiree Life Annuity.’
The document, which was endorsed by PenCom’s Head of Surveillance, Ehimeme Ohioma said “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.”
The commission noted that its attention had been drawn to the practise whereby PFAs reject the provisional Retiree Life Annuity (RLA) agreement presented by retirees already on programmed withdrawal desiring to transfer to retiree life annuity as the preferred mode of retirement.
It instructed the PFA’s to re-programme the present RSA balances of retirees on PW who seek to transfer to RLA using the stated procedures.
“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,” PenCom said.
It stressed that the annual total emolument provided as of the point of retirement should still be used and no provision should be made for lump sum and pension arrears.
The commission stated that provision be made for one-month pension buffer to avert gap in pension payout.
“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.”
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