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Implementation of Life Insurance Policy under the Pension Reform Act (PRA) 2004 - Role and Responsibilities of MDAs

Implementation of Life Insurance Policy under the Pension Reform Act (PRA) 2004 - Role and Responsibilities of MDAs. By National Pension Commission

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Implementation of Life Insurance Policy under the Pension Reform Act (PRA) 2004 - Role and Responsibilities of MDAs

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  1. Implementation of Life Insurance Policy under the Pension Reform Act (PRA) 2004 -Role and Responsibilities of MDAs By National Pension Commission At the one-day Seminar organised by the Office of Head of Service of the Federation for Permanent Secretaries and Director General of Government Agencies

  2. Presentation Outline • Statutory Requirement • Features of life insurance policy • Implementation efforts • Role of Supervisory Authorities or Agencies • Role and Responsibilities of MDAs • Conclusion

  3. Statutory Requirement • Section 9 (3) of Pension Reform Act 2004 makes Life Insurance policy compulsory for every employee • To be purchased by the employer on behalf of and for the benefit of employee

  4. Features of Life Insurance Policy • To cover a minimum of three (3) times the Annual Total Emolument (ATE) of employees • ATE is defined as basic and all allowances i.e. gross emolument • To cover death in service and support beneficiaries of the deceased employee • “Death” includes missing persons as provided in Section 6 of PRA 2004

  5. Features …cont’d • Efforts are in progress for policy to cover employee disability while in service • To be renewed after every twelve (12) calendar months • To be provided by an eligible licensed Insurance company

  6. Implementation Efforts • PenCom and National Insurance Commission (NAICOM) jointly issued the Guidelines for Life Insurance Policy for Employees in June 2006 • Guidelines stipulate modalities for implementation of the scheme • Policy is deemed to have commenced on 1 July, 2004 with the commencement of the Act

  7. Implementation Effort ….cont’d • Effective take-off in the public sector was delayed due to • Consolidation in the insurance industry • Need for implementation framework/structure • Actual take – off was January 2008

  8. Implementation Effort ….cont’d • PenCom processed 1,650 death cases with life insurance proceeds worth N2,554,347,190.70 • 232 cases with RSAs already credited with N396,609,134.37 life insurance proceeds • 513 cases with RSAs (N990.79million) yet to be paid • 905 deceased cases without RSAs (N1,166.95million) awaiting the opening of Death Benefit Accounts (DBAs) by beneficiaries to facilitate payment • 690 cases were not processed due to incomplete documentation, thus forwarded to OHOSF • PenCom ceased to process such cases effective 1 January 2009 while OHOSF took over the processing/coordination

  9. Implementation Effort…cont’d • Separate Life Insurance policy arrangement required for • Core Civil Service under the OHOSF • Political appointees under the Secretary to the Government of the Federation • The Armed Forces, Police, Paramilitary under their respective Supervising Agencies • Treasury Funded Agencies • Self Funded Agencies • Funding of the scheme in the public sector had been grossly inadequate as Police and Armed Forces are yet to be funded

  10. Implementation Effort…cont’d • Agencies are required to send certificate of compliance annually to PenCom • Private Sector compliance has been on the increase/deepening • Evidence of compliance being submitted to PenCom

  11. Role of Supervisory Authority or Agency Appointment of Insurance Company • Confirm eligibility of insurance companies from NAICOM & PenCom • Appoint insurance companies and/or brokers or consortium of insurance companies/brokers • Appoint lead underwriter/broker as main liaison parties/for ease of coordination where necessary

  12. Role of Supervisory Authority or Agency …cont’d • Compile employee details from MDAs (names, Grade Level/Steps, Annual Total Emolument, PFAs, PIN Nos e.t.c) • Present employee details & insurable benefits (cover) to underwriter(s) • Invite underwriters to quote for premium and agree premium amounts with underwriters

  13. Role of Supervisory Authority or Agency …cont’d • Make budgetary provisions for annual premium and arrears of claims before take-off of scheme • Facilitate payment of premium to underwriters • Obtain Insurance certificate from underwriter(s) • Forward copies of Life Insurance certificate to employees’ PFAs and PenCom

  14. Role of Supervisory Authority or Agency …cont’d Facilitate Payment of life insurance proceeds • Notify underwriters of death of any employee/missing staff • Provide deceased employees’ PIN, PFA & other details to Insurance companies for remittance of insurance proceeds • Request underwriters to pay the proceeds into RSAs • It is an offence to pay directly to Next of Kin/beneficiaries

  15. Summary of roles of Supervisory Authority or Agency • To liaise with units of the MDA to collate employee related information for brokers/insurance companies • To liaise with brokers/insurance companies on policy renewal, claims processing and other matters • To liaise with BOF for payments of premium • To liaise with PenCom/PFAs of employees on cases of death/missing persons e. t .c • To advise NOK/beneficiaries of deceased/missing employees on documentations/processes

  16. Role and Responsilities of MDAs • Pension Desk Officer (PDO) to liaise with Next of Kin of deceased /missing employees and obtain applicable documents for PFAs and/ Supervisory Authority or Agency • Medical Certificate of Death/Cause of Death; • Certificate of Registration of Death (if available); • Police Report (if death is by accident); • Letter of Administration or Will admitted to Probate;

  17. Role and Responsilities of MDAs…cont’d • Declaration of Wish/Evidence of Nomination of NOK by deceased staff • Police report (that a person has been missing over 12 months) • Employer’s confirmation of employee’s disappearance (for missing person) • To identify NOKs of deceased/missing employees • PFAs & PIN Nose.t.c • PDO to report and submit the documents to the Supervisory Authority or Agency

  18. Conclusion • FGN is the largest single employer of labour • The success of the life insurance policy is critical to the continued success of the Pension Reform • Need for compliance to ensure a successful implementation in the Public Sector • PenCom is always available to provide the necessary assistance

  19. Thank you National Pension Commission Plot 174, Adetokunbo Ademola Crescent, Wuse II, Abuja 09 – 4138736 – 40 info@pencom.gov.ng www.pencom.gov.ng

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