Facts about annuity as 124,131 retirees get N275.454bn lump sum

Facts about annuity as 124,131 retirees get N275.454bn lump sum

Nike Popoola

No fewer than 124,131 Life Annuity retirees have gotten N275.454bn lump sum from their Retirement Savings Accounts (RSA).

N759.158bn premium was paid for their pensions, and they were receiving N 7.517bn monthly as of the end of March, 2024.

Figures obtained by Daily Economy from the National Pension Commission (PenCom) on Q1, 2024 report revealed.

According to the Pension Reform Act (PRA) 2014 under section 7 (1),  “A holder of the Retirement Saving Account (RSA) shall, upon  retirement or attaining the age of 50 years, whichever is later, utilize the amount credited to his RSA for the following benefits-

“Withdrawal of lump sum from the total amount credited to RSA provided the amount left after the lump sum withdrawal is sufficient to procure programmed withdrawal or annuity for life.”

These are facts about Life Annuity for retirees

1-A Life Annuity is a series of payment made to a person (called an Annuitant) for the rest of his life upon payment of the purchase price which is usually paid once.

2- Income is paid to Annuitant throughout remaining lifetime (no matter how long the retiree lives)

3-There is guarantee that income cannot reduce no matter what happens

4-Retirement Annuity is payable firstly for 10 years and thereafter (That means the dependent gets the remaining balance if the annuitant dies before 10 years)

5-Income is secure and not subject to market fluctuation. It cannot be outlived.

6-The life insurance companies do not pay uniform amount but offer different rates of monthly payments to retirees.

7-An annuity retiree cannot change to Programmed Withdrawal (monthly pensions paid by Pension Fund Administrators PFAs)

Who can take Life Annuity

-Every retiree/person who is yet to collect the proceed of his Retirement Savings Account (RSA) or has a bulk sum of either from gratuity or otherwise

-Every retiree under the Contributory Pension Scheme (CPS)

-Every retiree/person who desires to have a steady stream of income for the rest of his life. (Annuity).

Requirement needed to sign up for annuity

• Data Recapture Exercise – this is mandatory for all RSA holders
• A copy of retirement letter / Bond Certificate
• Template / Statement obtained form PFA
• Copy of valid means of Identification
• Age declaration / Birth certificate
• One retiree’s Passport Photograph and one each of beneficiary(s).
• Retiree’s last pay slips.
• Completed proposal form with beneficiary(s) full names, phone numbers and sharing ratio stated.

Procedure

-At submission of required documents to PFA, notify PFA of your intention to choose Annuity.

-Obtain RSA balance in Template or Statement to ascertain balance from your PFA. Balance is also required to obtain Annuity quotation from Annuity Service Providers.

-After that, obtain a Provisional Agreement from Annuity Service Provider (Insurance companies)

-Payment only commences after the PFA receives approval from PenCom.

-Monthly installments are credited directly into Annuitant’s bank account immediately payment advice is received from the PFC