Insurance Firms May Lose Right To Keep Pension Fund Assets

Insurance Firms may lose the right to keep Pension Fund Assets if the planned review of the Pension Reform Act 2014 is eventually carried out, THE WHISTLER has learnt.

Recall that National Pension Commission had initiated the process of reviewing the Pension Reform Act 2014 in order to address identified challenges.

In a bid to carry out a comprehensive and constructive review of the Act, the Commission had reached out to pension industry operators, financial regulators and other relevant stakeholders to get their input.

However according to a document titled “Proposed Amendments of the Pension Reform Act 2014” which was obtained by THE WHISTLER, a change may occur to Section 116(1).

The Section allows insurance firms to keep pension funds through sales of annuity.

But in the ongoing review, the Commission and other stakeholders are proposing that Pension Fund should be held exclusively by licensed Pension Funds Custodian and not insurance firms.

The PFC are in charge of keeping the pension funds and assets in safe custody and carries out transactions on behalf of the Pension Fund Administrators.

Based on the plan, Section 116(1), which had the phrase “in the custody of any insurance company” is expected to read “in the custody of any Pension Fund Custodian.”

The document added, “Section 56 of the PRA 2014 stipulates that pension funds and assets shall only be held by Pension Funds Custodian licensed by the Commission.

“Accordingly, pension life annuity funds and assets which, by virtue of Section 120 of the PRA 2014, are pension assets must be held exclusively by licensed PFCs and not insurance companies.

“The proposed amendment would, therefore, ensure clarity and correctness.”

It was also observed that the review may give room for a new provision in Section 25(2)(d).

This provision would give the commission’s board the power to approve it’s budget.

The proposed amendment, would also be in tandem with subsisting Financial Regulations.

Another amendment that the revised Act may come with if approved, is the section that deals with death benefit.

The new provision would give powers to employers to effect payment of claims from the death of any member of staff.

Since the commencement of the Pension Reform Act 2004, this would be the second time the Act would be reviewed.

The first review was what gave birth to the Pension Reform Act 2014 under the former Director-General, PenCom, Chinelo Anohu-Amazu.

On when the review process would be concluded the Head, Corporate Communications Department, PenCom, Peter Aghahowa, said it is a long process, adding the outbreak of the coronavirus pandemic had stalled the progress.

He said, ”We have not agreed on anything yet. so for now we are still receiving suggestions and recommendations from stakeholders. What you are seeing now can be called speculations.

“This is the initial stage, all the ideas will be collated, agreed on and sent to the National Assembly, then a public hearing will be held.

“There is still a long way. Moreso in this Covid period , everything has been stalled, so one cannot say or be sure when the process will be ended but we have started work on it.”