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Pension firms pay N77bn to deceased workers’ relations

By on August 17, 2015

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.

 

[Punch]