The Programmed Withdrawal (PW) is a product of Pension FundAdministrators (PFAs) for their retiring clients. Retire Life Annuity (RLA) on the other hand is a product of insurance companies meant for retirees.
The PFAs interface directly with employees from inception of their careers, managing their contributions up to the time of exit. The insurance companies can only market and sell their annuity product to those who are retiring.
The Pension Reforms Act (PRA) 2014 provides in “Section 7(1) that a holder of a Retirement Savings Account (RSA) shall, upon retirement or attaining the age of 50 years, whichever is later, utilise the amount credited to his retirement savings account for withdrawal of a lump sum from the total amount credited to his RSA provided that the amount left after the lump sum withdrawal shall be sufficient to procure a programmed fund withdrawals or annuity for life in accordance with extant guidelines by PenCom, from time to time; Programmed monthly or quarterly withdrawals calculated on the basis of an expected life span; and annuity for life purchased from a life insurance company licensed by NAICOM with monthly or quarterly payments in line with guidelines jointly issued by PenCom and NAICOM.’’
Over time (now in the past), employees of both PFAs and insurance companies have been at each other, de-marketing the opposite products.
This prompted the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) to sign Revised Regulation on Retiree Life Annuity, the Guidelines on Group Life Insurance Policy for employees and CPS retiree pack.
The revised Regulations and Guidelines, signed on Monday, 31st August 2020, provide clarity on the provisions of the PRA 2014 in areas relating to Retiree Life Annuity with focus on guiding stakeholders to make informed decisions, ensure safety of Retiree Life Annuity funds and assets, address concerns of mis-selling and de-marketing by pension and insurance operators as well as increasing stability into the financial sector of the economy.