By Loveth Azodo
The Director General, Lagos State Pension Commission(LASPEC) ,Mrs Folashade Onanuga, in what looked more like a mediator role than address, berated both life insurance operators selling annuity retirement plan and Pension Fund Operators (PFAs) selling Programme Withdrawal plan to retiree=
s for their lingering tussle over patronage of their products.
Onanuga, who reprimanded the insurers and the PFAs at the second edition of the annual National Conference organised by the National Association of Insurance and Pension Correspondents (NAIPCO) in Lagos ,insisted that the competition between the two operators must be healthy warning that otherwise, the ultimate consumer would loose confidence in the transparency.
Both the PFAs and life insurers selling Annuity plan have been at logger heads over whose product the retirees would embrace.
The duo, have their agents and marketers as driving force for the unhealthy marketing competition. Each, tries to run the other down in a bid to convince the retiree to embrace his plan while the intending retirees are pushed to the wall of confusion.
Speaking against this prevailing negative marketing attitude in the business of insurance and pension both of where she has spent reasonable number of years of service, Onanuga, observed that the PFA advocates as human thinking will suggest that fighting to gain upper market share between the two operators means that the product being sold is more to the benefit of the operators than to the ultimate consumer, she added that the ultimate consumer will therefore be wary of both products.
She painted a picture of what currently transpires between them saying, “the PFAs seem to be sad that the monopoly they have been enjoying since the advent of contributory pension scheme in 2004 is suddenly being broken and that their captive market is slipping away from their reach.
“The Life Assurers whose traditional business is pension provision are set through aggressive marketing of life annuity business to retain and remain relevant in their natural habitat and the animosity felt when a new pension industry emerged in Nigeria is more intense with the PFAs set not to allow business to leave their terrain”, she observed..
According to her, to discourage people from taking annuity in place of programmed withdrawal, the PFAs, have leveled a good number of allegations against life insurance firms., the Annuity Service Providers have also strong allegations against the PFAs
Onanuga, pointed out that the result of this has remained mutual distrust, unhealthy rivalry leading to de-marketing.
According to her, there is the belief that the pension industry regulator,(PENCOM) is a major cause of the frosty relationship as most of its pronouncements and policies appear to be against the insurance business. She said this is despite the fact that insurance industry regulator, the National Insurance Commission,(NAICOM) sits on the board of National Pension Commission( PENCOM ) , yet PenCom, maintains an overbearing attitude to pension operations
On the role to be played by both regulators, Onanuga, stated ” “as much as the PRA 2014 has stated that pension can be received either through a programmed withdrawal mode or life annuity payout, PenCom, should have insurance professionals in their establishment to guide them on annuity business and thereby the commission would have a firm grasp of annuity operations and be able to defend both industries in as much as the PRA 2014 has as its provision life annuity business as a medium of receipt of terminal entitlements…
According to him, PennCom, needs to have understanding of both the fund management and the risk business offered by insurance companies and be able to gather the two operators together to advise them on service delivery features they expect, to instill confidence in the customer.
She also said standard for the industry must be clearly stated, adding, this should be easy because NAICOM sits on PenCom Board”.
She however observed that a right step was taken in the directive for pension funds managed by life insurance operators to be held by licensed pension fund custodians.
She observed that PenCom,however needs to understand the risks peculiar to the annuity business such as the longevity risks.
Suggesting the way forward for the two operators, the LASPEC boss said PFAs need to understand that they don’t have a monopoly over the business. She said they need to understand that having encroached on another industry core business, using the mortality tables as provided by actuaries in arriving at the monthly take home pay, they should not protect to the detriment of the pension business, the funds in their custody.
“A serious investor with foresight will choose to operate in both fields e.g. Leadway Assurance & Leadway Pensure. The staff of the two operators should meet regularly on how to introduce service delivery features to ensure that the customer remains.
“In proper parlance actually, a PFA should encourage a contributor who reaches retirement age to do annuity business. So the PFA who is a fund administrator maintains its core business of funds management and growth and at retirement, should educate the client on the necessity of drawing pensions for life through annuity but if the client wants to draw for a shorter period, then do programmed withdrawal.
On the part of annuity service providers, Onanuga, said they need to learn how to do legitimate business in the sense that whilst marketing their product, they need not behave like fraudsters adding that there are instances of insurance companies who invite retirees to programs using the name of LASPEC.
“Some insurance agents will disguise as relatives of retirees and listen to the exit discussion between the contributor and the PFA. Thereafter, they will twist to their advantage everything said thereby confusing the retiree”