By

National Pension CommissionAt the one-day Seminar organised by the Office of Head of Service of the

Federation for Permanent Secretaries and Director General of Government Agencies

23-Jul-09 1

Statutory Requirement Features of life insurance policy Implementation efforts Role of Supervisory Authorities or Agencies Role and Responsibilities of MDAs Conclusion

23-Jul-09 2

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

23-Jul-09 3

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

23-Jul-09 4

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

23-Jul-09 5

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

23-Jul-09 6

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

23-Jul-09 7

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

23-Jul-09 8

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

23-Jul-09 9

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

23-Jul-09 10

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

23-Jul-09 11

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

23-Jul-09 12

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

23-Jul-09 13

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

23-Jul-09 14

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

23-Jul-09 15

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;

23-Jul-09 16

◦ 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 Nos e.t.c PDO to report and submit the documents

to the Supervisory Authority or Agency

23-Jul-09 17

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

23-Jul-09 18

National Pension CommissionPlot 174, Adetokunbo Ademola

Crescent,Wuse II, Abuja

09 – 4138736 – 40info@pencom.gov.ngwww.pencom.gov.ng

23-Jul-09 19