By Asishana John
A set of retirees under the Contributory Pension Scheme (CPS) wishing to earn pensions for life has put down N474.1 billion premium with life insurance companies offering retiree life annuity.
Retirees bet N474bn in payment for life Retiree Annuity or Annuity for life, as it is generally called, is a retirement instrument option for retiring employees offered by a life insurance company licensed by the National Insurance Commission (NAICOM).
The amount is the total premium received since the beginning of the CPS up to the first quarter of 2021 by life insurance companies, according to figures accessed from the National Pension Commission (PenCom).
Retiree Annuity or Annuity for life, as it is generally called, is a retirement instrument option for retiring employees offered by a life insurance company licensed by the National Insurance Commission (NAICOM).
It is a type of annuity contract that provides, in return for a lump sum, a monthly or quarterly payment starting immediately after retirement and continuing for the rest of the retiree’s life.
The contract is often purchased by retiring persons who want an income that is guaranteed to last for the rest of their lives, no matter how long that might be.
While programmed Withdrawal, another retirement option managed by Pension Fund Administrators (PFAs) housed a larger part of the retiree funds, there is growing awareness about retiree annuity and increasing appreciation of payment for life by many retirees.
What these also show is increasing confidence about insurance, particularly in the area of annuity brought by the CPS.
During the first quarter of 2021, the PenCom granted approval to 1,601 retirees for a life annuity to the sum of N10.11 billion as premium in return for total monthly/quarterly annuities of N98.33 million. This is against the N10.12 billion paid in the last quarter of 2020 to 1,596 retirees for a month/quarterly annuities of N11.68 million.
The Commissioner for Insurance/CEO, NAICOM, Mr. Sunday Thomas, said during a visit to Mutual Benefits Assurance Retail Training Office, Mushin, Lagos, that the time had come when insurance would take its rightful place in the economy.
The pension fund that is currently standing at N12 trillion will empty itself by way of annuity, as a lot of retirees are beginning to understand the benefits of insurance and how annuity can enable them earn pension throughout their life, Thomas said.
According to Thomas, this has a great future for the business and those who associate with the insurance industry will be the beneficiaries.
The insurance regulator has noted that an increase in premium of life companies offering annuity has seen the industry life premium grow by 37 percent since the beginning of 2014.