Pension firms pay N77bn to deceased workers’ relations
A
total of N77.18bn has been paid to the next of kin of 27,321 deceased
workers as pension benefits of their breadwinners under the Compulsory
Pension Scheme.
The amount, which was paid as of the
first quarter of this year, showed an increase of N25.9bn over N52bn.9bn
recorded as of the first quarter of last year.
These
figures were contained in the latest report of the National Pension
Commission on pension matters obtained by our correspondent on Friday.
NAICOM said the amount (N77.18bn)
represented what had been paid to the beneficiaries of the deceased
employees from the inception of the scheme to the end of the first
quarter of 2015.
Experts noted that more relatives of
deceased workers were now coming out to demand for the benefits of their
breadwinners following the reform of the pension administration, which
had simplified the claim and entitlement process.
The Pension Reform Act 2004 was amended last year as part of the reforms and it gave birth to the Pension Reform Act 2014.
Experts observed that the removal of a
Will requirement and letter of administration must have prompted a lot
of relatives to seek the payment of the insurance benefits.
The PRA states that an employer shall
maintain life insurance policy in favour of an employee for a minimum of
three times the annual total emolument of the employee.
Under the PRA 2004, the Pension Fund
Administrators were not allowed to pay out such benefits if the deceased
worker did not leave a Will behind unless the relatives could produce a
letter of administration, which was a tedious document to get.
This, experts said, made most relatives
to forgo these benefits as they found it difficult to go through the
stress of obtaining letters of administration.
The Director-General, Nigerian Insurers
Association, Mr. Sunday Thomas, said, “The delays that arise in
transferring the benefits from insurance firms to the PFAs when there
are group life insurance claims and the demand for letters of
administration have been removed.
“The provision of the insurance law
regarding payment of claims is now being implemented, which means the
main beneficiary will be paid directly and that reduces the delay that
occurs in claims settlement.”
Before the advent of the PRA 2014, he
explained that claims used to be paid into the RSAs of the workers, with
the PFAs enforcing the requirement for letters of administration.
The only ground on which an insurance
company will now ask for the letters of administration, according to
him, is if the deceased worker did not leave any beneficiary behind.
The Managing Director, Capital Express
Assurance Limited, Mrs. Bola Odukale, noted that the PRA 2014 had
simplified the CPS and made the insurance claims more accessible.
Under the present dispensation, she
explained that claims would be paid directly to the beneficiaries rather
than the PFAs through whom the claims used to be paid.
However, under the amended PRA 2014,
which was approved in July last year, the letter of administration as a
requirement was waived for the group life insurance claims but retained
for the pension benefits.
“Under the old PRA 2004, we used to pay
to the pension operators and a lot of beneficiaries could not access it
because they would ask them to produce letters of administration, which
some may not get; but now, we pay to the named beneficiaries,” Odukale
said.
She said the provision of insurance cover
and removal of the bottleneck of the letters of administration would
enable the claims to be paid to the beneficiaries so that the children
of the deceased workers could continue with their lives and education
without any interruption.
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