On July 1, 2014 the Pension Reform Act 2014 or “the Act” was enacted into law commencing from July 1, 2014. The Act, which repealed the Pension Reform Act No 2 of 2004, governs and regulates the administration of the Contributory Pension Scheme in Nigeria.

The Act confers on workers certain legal rights, some of which will be discussed here. The Black’s law dictionary defines a right as something that is due to a person by just claim, legal guarantee, or moral principle; a legally enforceable claim that another will do or will not do a given act; a recognized and protected interest the violation of which is a wrong, a breach of duty that infringes one’s right.

The first right, is the right to pension. Section 3 of the Act, established a Contributory Pension Scheme for all employees of Public Services of the Federation, the Federal Capital Territory, States, local government and the Private Sector.

The worker also has a right to the employer’s contribution towards his/her pension. Section 4(1) of the Act provides that the rate of contribution to the Scheme shall be a minimum of ten percent of monthly total emolument of the employee by the the employer, while the employee shall contribute a minimum of eight percent.

The next right is the right to life insurance. Section 4(5) provides that in addition to the rates of contributions, 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 that premium shall be paid not later than the date of commencement of the cover.

For the enforcement of this right, the Act in Section 4(6) provides that 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.

The right to determine how to access retirement benefits under the Act. Section 7(1) provides that a holder of a retirement savings account shall, upon retirement or attaining the age of 50 years, whichever is later, utilize the amount credited to his retirement savings account for the following benefits: withdraw a lump sum from the total amount credited to his retirement savings account provided that the amount left after the lump sum withdrawals shall be sufficient to procure a programmed monthly or quarterly withdrawals calculated on the basis of an expected life span or annuity for life purchased from a Life Insurance Company licensed by the National Insurance Commission with monthly or quarterly payment. The decision to access benefits either through programmed withdrawal or annuity is the sole right of the employee.

• The right to contributions to the Scheme forming part of tax deductible expenses in computation of tax payment as well as retirement benefits being exempted from taxation.

Section 10 of the Act provides that notwithstanding the provisions of any other law, contributions to the Scheme under the Act shall form part of tax deductible expenses in the computation of tax payable by an employer and employee under the relevant Income Tax Law; moreover, all interests, dividends, profits, investment and other income accruable to pension funds and assets under the Act, as well as any amount payable as a retirement benefit under this Act shall not be taxable.

The other right, is the right to choose a Pension Fund Administrator (PFA). Section 11(2) provides that an employee to whom the Act applies shall notify his employer of the Pension Fund Administrator chosen by him. This means that the worker has the sole right to choose a PFA, with no interference by the employer.

The worker has a right to timely remittance of contributions into his/her retirement savings account (RSA). Section 11(3)(b) of the Act provides that not later than 7 working days from the day the employee is paid his salary, remit an amount comprising the employee’s and employer’s contributions to the Pension Fund Custodian (PFC) specified by the Pension Fund Administrator of the employee.

As penalty for non compliance, Section 11(6) provides that an employer who fails to deduct or remit the contributions within the stipulated time frame, shall in addition to making the remittance already due, be liable to a penalty to be stipulated by the National Pension Commission (PenCom).

Section 13 confers on the worker, the right to transfer his/her RSA from one PFA to another. This section provides that subject to the guidelines issued by the Commission, a holder of a retirement savings account maintained under the Act may not more than once in a year, transfer his account from one Pension Fund Administrator to another.

There is also the right to transfer an RSA from one employer to another. Section 14 of the Act provides that where an employee transfers his employment from one employer or Organisation to another, the same retirement savings account shall continue to be maintained by the employee or be transferred.

Section 15 protects pension rights of employees in the Public Service of the Federation and the Federal Capital Territory accrued under the defined Benefits Scheme.

The section provides that as from June 25, 2004, being the commencement of the Pension Reform Act 2004, the accrued pension right to retirement benefits of any employee in the Public Service of the Federation and the Federal Capital Territory who is already under any pension scheme existing before the commencement of that Act and has over 3 years to retire shall be recognised in the form of amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds by the Debt Management Office, which shall be redeemed upon retirement of the employee.

The Act grants a worker, the right to regular information. Section 55 provides among other duties of the Pension Fund Administrator, the duty to provide regular information on investment strategy, market returns and other performance indicators to employees or beneficiaries of the retirement savings account. The PFA shall also provide customer service support to employee including access to employee account balances and statements on demand.

One of the new rights granted the worker after the commencement of the Contributory Pension Scheme is the right to apply a percentage of the pension assets in the RSA for residential mortgage. Section 89(2) of the Act provides that a Pension Fund Administrator May, subject to guidelines issued by the Commission, apply a percentage of the pension assets in the retirement savings account towards the payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account.

Each of these rights, carry regimes of sanctions ranging from letters of advice, caution, warning, monetary sanctions, naming and shaming and litigation for violations and non compliance by either the employer or the Pension Fund Administrator since the rights are derived from a duty imposed on them by provisions in the Act.

BY BARRISTER IVOR TAKOR
DIRECTOR
 CENTRE FOR PENSION RIGHT ADVOCACY.

Committed to ensuring that its customers get the best of attention and are able to resolve their complaints without going through many protocols, Linkage Assurance Plc has strengthened its Customer Service Centre.

The service centre, which has been equipped with state-of-the-art technological infrastructure and more trained personnel will ensure that customers have unrestricted access to the care officers for any complaints they may have before or  after any transaction with the Company.

Daniel Braie, Managing Director/CEO of the company who disclosed this during the formal launch of the refurbished Center at the firm’s corporate head office in Lagos said this is in line with its vision to continue to enhance customer experience.

“What we have done today is one of the initiatives we have in our strategy to increase customer service experience because as an insurer, customer is the reason we are in business”

Braie noted that in the past, customers with complaints were directed to the technical officers concerned but “we have discovered that allowing the customer care officers to take their complaints and follow through until is resolved gives better experience to the customers.

“This initiative is targeted at strengthening the customers’ dispute resolution process and enhances the confidence they have on our activities as an insurance company.”

Braie also noted that the centre was launched to provide the company’s customers a platform and channel through which they can register their complaints and also to build confidence in current and prospective customers about the firm’s services and ability to meet their expectations.

Consolidated Hallmark Insurance (CHI) Plc has reported total assets of N10. 8 billion in the financial year ended December 31, 2018, representing an increase of 14 percent from N9.4 billion achieved in the same period of 2017.

Mr. Obinna Ekezie, the Chairman of CHI Plc said at the 24^th Annual General Meeting (AGM) of the company that the group also recorded a Gross Premium Written of N6.8 billion, a rise of 20.85 percent from 2017 while Profit After Tax grew from N 406 million in 2017 to N407 million in 2018.

Commenting on the result, Mr. Eddie Efekoha, the Managing Director/CEO of CHI Plc said: “The result of our performance in 2018 is an improvement on the growth projections for the industry.

Business retention remains good, even as we have further energized our Retail and Agency segments to grow new business inflow into the group. The retail segments achieved a combined growth of 135% in 2018 on their 2017 performance. This is a testament on our last year review where we reported progress being made in the deepening of our footprints in the retail market segments. CHI’s revenue diversification drive was a major factor that aided the sustained financial performance through the challenging market conditions of 2018, further reinforcing its role as a formidable player in the insurance industry.”

Efekoha said the company has continued to fulfil its claims payment obligations to customers promptly amidst rising claims in the industry, with N4, 787, 135, 023 spent on claims settlement in 2018 when compared with the N3, 354, 056, 803 of 2017.

“The 42.72 percent increase, though significant, is a reduction of the 93 percent growth in 2017 claims expenses over that of 2016. The increase in the figure for 2018 is attributable largely to a few large one-offs with a single payment on a marine hull loss amounting to N2, 174, 399, 976. Significant recoveries on overall claims expenses amounting to N2, 983, 861, 126 were however made from our robust reinsurance arrangement.”

On the looming recapitalisation in the insurance industry, the CHI CEO told shareholders: “Your company has remained proactive in ensuring a solid capital base, leveraging on your approval for additional capital in 2017 to successfully raise through a Private Placement, the sum of N734.5 million through an additional 1,130,000,000 units of ordinary shares at N0.65 per share. This has since increased the issued shares of our company to 8,130,000,000 from 7,000,000,000 units.

Our capacity to undertake larger and more technical transactions has been greatly enhanced with the recent injection of additional capital through funds generated from a combination of the Rights Issue and Private Placement. The equity stake of N734, 500, 000 by Niger Delta Exploration and Production Plc (16% stake) is a testament to the confidence reposed in us and the great opportunity ahead of us.”

On the future outlook, Efekoha painted a rosy picture for the company: “Our commitment remains unwaveringtowards evolving into a leading provider of insurance and other financial services in Nigeria.

The implementation of our Five-Year Corporate Strategy Plan has continued with increased vigour, following the setting up of a full-fledged Strategy function. Our internal processes are being reviewed to achieve operational efficiency and eliminate lapses; while our technical operations have been restructured into a Strategic Business Unit (SBU) model to drive greater efficiency.

Our technology space is also being up-scaled with more premium placed on revamping alternative and E-commerce channels to drive brand awareness, product distribution and in effect, revenue growth. We are developing products to address the emerging risks in the society that require insurance protection.

For us at Consolidated Hallmark, it has been 12 years of determination to continually improve on our records of performance. It is heart-warming to note that there has been incremental progress, Year-on-Year in overall company performance during this period of stewardship.”

Chief executives of insurance companies and shareholder groups have condemned the National Insurance Commission (NAICOM) for increasing the capital base of life insurance companies to N8 billion; N10 billion for general insurers and N18 billion for composite firms. And for reinsurance firms, the new capital level is N20 billion.

Two days ago, NAICOM announced the capital increase via a circular – NAICOM/DPR/CIR/25/2019, titled “Minimum paid-up share capital for insurance and reinsurance companies”
mandating operators in the insurance sector to comply by shoring up their capital base in line with its directive on or before June 30, 2020 or forfeit their operating licence.

Yesterday, a prominent chief executive officer in the industry told Business Journal: “This sudden announcement of N10 billion capital base for insurance firms and N18 billion for reinsurance companies is very unfortunate because of the parlous state of the economy. How many shareholders and investors are willing to pump in such billions into an insurance sector that is still declaring Kobo, Kobo dividend?

This new round of recapitalisation will impact negatively on the industry both now and in the long run.”

Another CEO also quipped in: “What the industry needs now is more public awareness and adoption of insurance by Nigerians, not injection of billions of naira as capital base. The capital we have now is more than adequate to run the business. The fact that one or two insurance firms are experiencing challenges due to wrong management decisions in terms of investment is not a plausible reason to push the market into another recapitalisation process. I am really afraid of the future of this industry if things continue this way.”

And for shareholders, the NAICOM recapitalisation policy is an ill-wind that will blow negatively on the fortunes of shareholders.

Sir Sunny Nwosu, National President of the Independent Shareholders Association of Nigeria (ISAN), accused NAICOM of threatening the safety of the investment of shareholders in the sector.

Nwosu added that the industry does not need such high level of capital to operate profitably.