32 states default on Group Life Insurance Scheme

Although the Contributory Pension Scheme, CPS, has been in operation for over 11 years now, 32 state governments are yet to comply with the section of the Pension Reform Act, 2014 which mandates employers to have compulsory group life insurance for employees.

Consequently, any employee of these states government who die in the course of duty will be deprived of their statutorily benefits which would have emanated from compulsory group life insurance as stipulated in the Pension Act.

The affected states are Abia, Adamawa, Akwa-ibom, Anambra, Bauchi, Bayelsa, Benue, Bornu, Cross River, Delta, Ebonyi, Edo, Ekiti, Enugu, Gombe, as well as Imo.

Others are Jigawa, Kaduna, Kano, Kebbi, Kogi, Kwara, Nasarawa, Ogun, Ondo, Oyo, Plateau, Sokoto, Taraba, Yobe, and Zamfara.

The National Pension Commission, PenCom, in its first quarter 2015 report stated that only Rivers, Osun, Niger and Lagos states employees are presently covered in the scheme.

Section 4 (5), of the Pension Reform Act, 2014 states that “Every employer shall maintain a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee and premium shall be paid not later than the date of commencement of the cover.

Employee and premium

Where the employer failed, refused or omitted to make payment as and when due, the employer shall make arrangement to effect the payment of claims arising from the death of any staff in its employment during such period.”

Although the Federal Government has embraced the scheme, it has refused to show leadership by ensuring premiums are paid as and when due.

According to the former Commissioner for Insurance, Mr. Fola Daniel, going by the ‘No premium, no cover’ policy, Federal Government’s workers presently have no insurance cover due to non-payment of this year’s premium.

Reacting to this negative trend, Managing Director of Premium Pension Limited, Mr. Wilson Ideva said that under subscription to the CPS is as a result of lack of adequate public awareness.

Ideva said, “A vast majority of Nigerians including the supposedly enlightened community lack information on the workings and belief in the workability of the contributory Pension Scheme. How else can one explain the less than 10% penetration of the market more than ten years after the commencement of the scheme?”

He said that less than seven million workers in Nigeria have subscribed to the new pension scheme out of the estimated more than seventy million working population while a total of N4.9 trillion has been amassed as pension assets under management in the industry.

“The lukewarm attitude of some Nigerians to the new pension scheme is inexplicable considering the ugly past of the defined benefit scheme which we have all been striving to break away from. Workers looked up to retirement with so much fear and trepidation because of the inherent uncertainties. The old scheme was fraught with corruption and bureaucratic bottlenecks that occasioned the ugly sight of long queues of aged citizens waiting to be paid pension that oftentimes never came.

“The scheme has already begun to improve the lives of retirees in the country. It is also inching towards becoming a critical contributor to national development” Ideva stated.

Ideva noted that under the CPS, entitlements are being paid regularly. “All you need to do is notify your Pension Fund Administrator (PFA) six months before your retirement and submit all the necessary documents.

Once this is done, within one or two months upon retirement you will be paid your lump sum which has replaced the gratuity and thereafter you begin to enjoy continuous programmed withdrawal,” he stated.

Source: Vanguard