LIFE Insurance companies seem not to be taking full advantage of the opportunities provided by the Pension Reform Act (PRA), as they are sluggishly trailing behind Pension Fund Administrators (PFAs) who are dominating the business of retirement and terminal benefits.
According to the National Pension Commission (PenCom), as at the end of February 2014, 84,097 retirees are receiving their monthly pensions by programme withdrawal that is administered by pension fund administrators, while a paltry sum of 8,479 retirees get theirs by annuity offered by life insurers.
Insurers have hinged their inability to break into the market on de-marketing by pension operators, an allegation the operators have denied.
Industry observers, who are not pleased with the situation, have called on insurers to stop lamenting, but be proactive in marketing and design of good products.
Director-General Nigerian Insurers Association (NIA), Sunday Thomas, urged insurance operators to fight the alleged de-marketing of annuity business by pension funds administrators through development of good products that suit the needs of retirees.
He noted that insurers and pension operators ought not to fight over annuity and programme withdrawal as the law has specified the roles to be played by the operators.
He said the menace would have stemmed from the operators’ lack of adequate knowledge of how the two businesses operate, adding that they were designed to complement each other.
He said: “When we heard of the issue of de-marketing between the operators, I had cause to write to PenCom and copied NAICOM. I believe it is due to lack of adequate knowledge of the subject.
“I happened to be among those who were instrumental to give effect to the law, when I was with NAICOM. And annuity was not designed to be a conflict between the institutions. But the problem may probably be due to lack of proper understanding. The two are supposed to complement each other.
“The role of programme withdrawal is totally different from life annuity. There was a time the former Director-General of PenCom, was encouraging insurance companies to come up with products that will attract retirees and he gave a figure of which out of the total number of retirees, it was very small number that went by way of life annuity.
“If I am an operator, de-marketing will not bother me too much, all I need to do, is come up with good products that would sufficiently be endeared in the minds of the retirees. I would go ahead and market the products and engage in public awareness.”
He noted that the association would intensify efforts on creating awareness on annuity and its importance in the life of a worker.
The National Pension Commission (PenCom) has also called on insurers to intensify efforts in marketing annuity business instead of complaining of de-marketing.
PenCom said the complain by some life insurers that they are denied annuity business by PFAs is uncalled-for as the Pension Reform Acts (PRA) 2004, has spelt out the roles to be played life insurers and PFAs in managing retirement funds.