10 February 2013

Nigeria: NAICOM Advises Retirees to Take Life Annuity

The National Insurance Commission (NAICOM) yesterday advised prospective retirees to take up life annuity as pension option to ensure peace of mind in retirement.

Mr Sam Onyeka, the Assistant Director, Inspectorate Directorate of NAICOM, gave the advice in an interview with the News Agency of Nigeria (NAN) in Lagos.

The NAICOM official encouraged retirees to go for annuity instead of the popular programme withdrawal option because of its benefits.

He said that annuity guaranteed payment of a fixed amount of pension to a retiree or his family for not less than 10 years, even if the retiree died.

Pension Reform Act (PRA) 2004 allows a retiree to utilise Retirement Savings Account (RSA) balance for programme withdrawal through Pension Fund Administrator (PFA), or annuity for life from a life insurance company.

According to Onyeka, the retiree needs proper information to be able to make an informed decision as to buy programme withdrawal annuity or both.

He said that annuity contract would be available over a guaranteed period.

"Guaranteed period is when the retiree or policy holder is sure that he will receive payment. It could be for five or six years.

"This means if the person dies in the course of payment, the family will continue receiving the payment until about 10 years," he said.

Onyeka said that the retiree should understand that he could not be compelled to choose between life annuity and programme withdrawal.

"The law gives retiree option to buy either of the two. Once the annuity contract is signed, the retiree cannot change from it to programme withdrawal.

"The retiree however has the freedom to change from one insurance firm to another after two years," the NAICOM assistant director said.

Onyeka said that where a retiree chose to collect a lump sum, the amount for annuity would be determined first before it could be allowed.


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