Retirees under the Contributory Pension Scheme (CPS) numbering 129, 435 parked N798.58 billion in life annuity by the second quarter of 2024, the National Pension Commission (PenCom) said.
This represents a 20 percent increase from N665.13 billion invested by 111,708 retirees that opted for life annuity in the corresponding period of 2023.
Nigerian states also remitted over N236.7 billion between January 2020 and the second quarter of 2024, PenCom noted.
With this, retirees, also called annuitants, earn monthly or quarterly pensions through their investments.
Section 7(1a) of the Pension Reform Act 2014 states that an employee on retirement shall procure Annuity for Life Policy or Programmed Withdrawal. The lump sum for the procurement of an Annuity for Life Policy or Programmed Withdrawal must have been accumulated through series of employer/employee contributions into the Retirement Savings Account (RSA) of the retiring employee throughout his/her working career
Niyi Onifade, managing director, Heirs Life Assurance Company, said annuity pays retirees a steady amount, monthly or quarterly, for as long as the annuitant lives. This way, the individual is assured of a great future even during retirement.
He said in this case, pensioners have every reason to live life confidently as the annuity plan takes care of the worries of retirement, specifically, the uncertainty of the future.
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According to him, everyone needs to understand the options open to them as they build their retirement plan, the CEO said.
The uptake for retiree life annuity has continued to rise with increasing awareness on the benefits of the scheme.
The data in second quarter show that out of the number of retirees that opted for life annuity, 68, 048 were federal government employees, 18,837 were state government employees, while 42,514 were employees from the private sector.
A deeper look into the data shows that the retirees collected N294.12 billion of the amount in their RSAs as lump sums, while the insurance companies paid out N8.06 billion as pensions on monthly basis.
The data also show that 5, 312 retirees in the period under review moved to life insurance companies’ N39.42 billion premium, compared to 4,277 retirees that moved N30.11 billion to life insurance in the first quarter of 2023
AIICO Insurance Plc, one of the leading underwriters making impact in annuity products, disburses about N1.3 billion monthly to annuitants.
“At AIICO, we understand the importance of financial stability, especially during retirement,” said Gbenga Ilori, executive director and head of Retail Business at AIICO.
“Our Annuity product is designed to address this very need, offering our customers peace of mind with guaranteed monthly pay-outs for life. We are proud to be a part of their financial journey.”
Ilori stated further, “We are confident that the Annuity market holds immense potential, and we are well-positioned to capitalize on this growth.”
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Through strategic acquisitions such as the Annuity portfolios of Royal Exchange Assurance and Tangerine Africa, the company has expanded its reach and boosted its footprint and legacy in the annuity business, he said.
“Integrating Tangerine Africa’s annuity portfolio is a key step in AIICO’s growth strategy and our commitment to delivering exceptional value to our customers,” said Babatunde Fajemirokun, managing director/CEO of AIICO Insurance Plc.
Chika Onwunali, partner at Premium Debate, had said that with life expectancy increasing and the cost of living rising, more and more people are looking for ways to ensure they have a guaranteed income for life.
Onwunali said one of the factors driving uptake of annuity is the introduction of regulations that make annuities more attractive to consumers.
“I am yet to see such in the pension regulation, except with individual insurers, particularly when you consider freebies accruing to participants in programmed withdrawal made possible by PenCom,” he said
