PenCom stops payment of death benefit claims without its approval
December 3, 2020830 views0 comments
By Zainab Iwayemi
Nigeria’s pension regulator, the National Pension Commission (PenCom), has directed pension fund administrators (PFAs) to put a hold on payment of death benefit claims to legal beneficiaries without first seeking the commission’s approval.
This is contained in a circular dated 1st December 2020, which it described as an addendum to the earlier directive to PFAs via a letter in 2013, requesting to pay additional inflow into deceased employees’ RSA to legal beneficiaries after initial approval have been obtained, without the commission further approval. This new development, PenCom noted, “became a necessity due to an increase in death benefit payment that hardly meets internal control measures”.
The circular read in part: “Please recall the commission’s directive to PFAs via its letter dated 16 May 2013 to pay an additional inflow into deceased employees’ RSA to legal beneficiary(ies), after initial approval has been obtained, without reverting to the commission for further approvals. However, the commission has noted in recent times increase in death benefit payment that did not meet the required internal control measures. Hence, the need to strengthen the death benefit payment process.
“Accordingly, the commission hereby directs the immediate cessation of payment of additional death benefit claims without the commission’s approval.”
Stating the procedure to be followed, the commission highlighted submission of the initial payment of death benefit claims to the legal beneficiary – which is to be submitted to the commission for approval via the Risk Management Analysis System (RMAS), as well as payment of additional death benefit claims – submitted through the benefit and insurance department’s email – as conditions that must be met before granting death benefit claims.
It also noted that request for payment would be thoroughly scrutinized and subjected to approval or denial by the commission. It, therefore, urged pension administrators to adhere strictly to guideline so as not to attract sanction.