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Overview

Section 9 (3) of the Pension Reform Act 2004 (The Act) requires every employer, to which the Act applies, to maintain Life Insurance Policy in favor of the employee for a minimum of three times the annual total emolument of the employee.

General Requirements

The employer shall fully bear all costs in relation to procurement of this policy, and this shall be in addition to, and separate from, the contributions to be made by the employer to each employee’s Retirement Savings Account, as required by the Act.

The Life Insurance Policy shall be effected through the purchase of a Life Policy issued by a Nigerian Registered Insurance Company, licensed and authorized to conduct Life Insurance Business by National Insurance Commission (NAICOM) under the Insurance Act 2003.

For ease of administration, a Consortium of eligible insurance Companies, as determined in the guideline, shall be constituted for the purpose of providing life insurance cover for employees of the Federal Government. Employers in the private sector shall be at liberty to engage the service of any insurance company or group of insurance companies that satisfies the eligibility criteria in the guidelines.

Employers shall not be allowed to self-insure and as stipulated in Section 6 (1) of the Pension Reform Act, the National Pension Commission shall set up a Board of Inquiry for treating any case of missing employees referred to it by employers, for insurance claim purposes.

Eligible Insurance Companies

In the first year of implementation, which is 2006, the National Pension Commission shall provide a list of NAICOM licensed and registered insurance companies eligible to conduct the business of provision of life insurance cover, under the provisions of the Pension Reform Act 2004. For subsequent years, such eligible insurance companies must have met minimum acceptable standards to be fixed by the National Pension Commission. The Commission shall collaborate with NAICOM to facilitate the Consortium referred to in the guidelines from amongst the list of eligible insurance companies.

Policy Coverage

The policy shall provide cover to the insured against Death. Insurance coverage shall be for twelve (12) months, from January through December, and shall be renewable at the end of each coverage year.

Benefits Of Compliance

Compliance is mandatory for all organisations listed in Section 2 of the Pension Reform Act (PRA 2014) and qualifies organizations that intend to bid for Government contracts or solicit for businesses from any Federal Government Ministry, and Agency (MDAs).

Rate Of Contributions

The premium payable on the policy shall be pro-rated as applicable where an employee joins the scheme in the course of the year. Where an employee leaves the service of the employer before the expiration of twelve (12) months, the premium paid relating to the unexpired period, shall be returned/set aside to the credit of the employer.

Insurance cover is mandatory for all employees as long as they are in employment. Insurers shall be expected to ensure that employers comply with the minimum insurance cover of three times the annual total emolument of each employee. Notwithstanding the provisions above, employers that have better existing life insurance policies for their employees, in terms of benefits, shall maintain such policies.

Procedure

Each employer shall obtain an insurance certificate from the insurer. Such certificate shall be accompanied by a schedule, which shall indicate amongst other things, the period of coverage, the number and details of staff at inception/renewal date, their total emoluments, the benefit payable, and the annual premium/date of full payment.

The Insurer shall issue the insurance certificate to employers within a month from the policy inception/renewal date. Employers shall display a copy of the insurance certificate in a conspicuous place within the premises, for the information of the employees, as evidence of having taken such policies.

Employers shall send a copy of the insurance certificate with the schedule of benefits to the National Pension Commission and the Pension Fund Administrators (PFAs) where the employees maintain their Retirement Savings Accounts (RSAs), not later than 31st March every year.

Employers shall be required to commence renewal negotiations in writing, within two (2) months to the expiration of the current insurance coverage. Such negotiation must be concluded before the last day of the current cover. Full payment of the insurance premium shall be made, at the latest, on the first day of insurance cover. Where an employer fails to effect full payment of premium at the stipulated time, the insurer shall report such failure to the National Pension Commission within fourteen (14) days of non-receipt of Premium.

How To Apply For A Pension Compliance Certificate

All enquiries regarding these guidelines shall be directed to the National Pension Commission/National Insurance Commission.

Processing Time

The Insurer shall issue the insurance certificate to employers within a month from the policy inception/renewal date. Employers shall display a copy of the insurance certificate in a conspicuous place within the premises, for the information of the employees, as evidence of having taken such policies.

Caution: Applicants are strongly advised to deal directly with the Commission in matters relating to the issuance of Pension Clearance Certificates to avoid being defrauded by touts. Applicants can contact the Commissions Compliance and Enforcement Department on +234 (9) 2921535 for further inquiries. Should you encounter any difficulties or are unable to process your Compliance Certificate please do not hesitate to contact any of our approved Professionals by clicking here

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