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


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

presentation outline
Presentation Outline
  • Statutory Requirement
  • Features of life insurance policy
  • Implementation efforts
  • Role of Supervisory Authorities or Agencies
  • Role and Responsibilities of MDAs
  • Conclusion
statutory requirement
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
features of life insurance policy
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
features cont d
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
implementation efforts
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
implementation effort cont d
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
implementation effort cont d8
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
implementation effort cont d9
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
implementation effort cont d10
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
role of supervisory authority or agency
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
role of supervisory authority or agency cont d
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
role of supervisory authority or agency cont d13
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
role of supervisory authority or agency cont d14
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
summary of roles of supervisory authority or agency
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
role and responsilities of mdas
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;
role and responsilities of mdas cont d
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
  • 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
thank you
Thank you

National Pension Commission

Plot 174, Adetokunbo Ademola Crescent,

Wuse II, Abuja

09 – 4138736 – 40