Over 100,000 annuitants in Nigeria have received lump sum payments totaling N216.66 billion under the Contributory Pension Scheme, as reported by the National Pension Commission. This amount represents approximately a quarter of the balance in their Retirement Savings Accounts when they retired.
To facilitate monthly stipends for retirees, Pension Fund Administrators transferred N642.32 billion in premiums to life insurance companies. The annuitants are currently receiving an average monthly stipend of N6.53 billion, as per the PenCom’s report on ‘Retirement by annuity in Q1, 2023.’
During the first quarter of 2023, 3,505 retirees chose the annuity mode of pension payment, with N15.23 billion approved for payment to the retirees. An additional N26.54 million was approved for the retiree life annuity providers as a premium in exchange for a monthly annuity of N291.80 million.
The introduction of the Pension Reform Act has created a significant business opportunity for the insurance industry through life annuities. Under the CPS, retirees can opt for either programmed withdrawal or life annuity retirement options. Life annuity, regulated by the National Insurance Commission, provides retirees with regular pension payments for life, guaranteed for ten years in case of death.
In the fourth quarter of 2022, the annuity business contributed about 26.9% of the insurance sector’s gross premium income, according to NAICOM’s ‘Bulletin of the insurance market performance’ report. The popularity of annuities reflects the growing need for stable financial security during retirement among Nigerian citizens.
