HUNDREDS of retirees receiving their monthly pension from the African Alliance Insurance Plc are groaning in pains following the non-payment of their monthly pensions since May this year.
This is the first time a breach of this magnitude is happening since the commencement of the Contributory Pension Scheme (CPS), a retiree who is also highly knowledgeable on pension matters, Comrade Ivor Takor, told National Record.
A number of pensioners who purchased life annuity from the African Alliance Insurance Plc’s confirmed to National Record that the insurance firm has consistently failed to meet its monthly obligation to pensioners for the past four months.
Pensioners, who spoke with National Record under the condition of anonymity, say the challenge is national, adding that they are at a loss as to the nature of the problem incapacitating African Alliance Insurance Plc from paying retirees their monthly pensions.
According to several pensioners spoken to by National Record, when their situation became unbearable after some of them severally visited African Alliance office in Abuja between June and July 2024 for enquiries without any reasonable explanation on their unpaid pensions, some of them individually wrote to African Alliance Insurance Plc via email drawing the management’s attention to the non-payment since May 2024.
“I write to report that my pension has not been paid since May 2024, which means that from May 2024, I have not been paid.
“The effect of the above has caused me untold hardship.
“I would be grateful for the immediate payment of my pension to alleviate my suffering without further delay,” one of the letters, a prototype of several such letters of complaint sighted by National Record read.
Letters of complaint and Auto-generated responses
The insurance company’s response to all the letters from concerned pensioners were similar in words, and not signed by any officer of African Alliance Insurance Plc, indicating that they were automated replies.
The automated response to all the letters reads:
“Dear Sir/Madam,
“We acknowledge the receipt of this mail and sincerely apologise for the delay in inconveniences. [sic]
“Please be informed that payments have commenced in batches and will be completed soon.
“Thanks for your patience.
“Kind regards.
“African Alliance Insurance Plc”
“info@africanallianceplc.com”
But as at press time, none of the pensioners spoken to by National Record had acknowledged being paid the arrears of unpaid pension by the insurance firm.
When several calls by National Record to the company rang out with obviously no effort to call back, a letter of enquiry, dated Monday, August 12, 2024, addressed to the Managing Director/Chief Executive Officer, Mrs Joyce Ojemudia, was dispatched via email seeking, among other explanations, the validity of the claims by the pensioners, and if true, the reasons for the default in payment, when the problem will be resolved, whether the National Pension Commission (PenCom) and National Insurance Commission (NAICOM) were aware of the challenges in pension payment.
The response received by National Record the following day was exactly the same automated response:
“Dear Sir/Madam,
“We acknowledge the receipt of this mail and sincerely apologize for the delay in inconveniences. [sic]
“Please be informed that payments have commenced in batches and will be completed soon.
“Thanks for your patience.
“Kind regards,
African Alliance Insurance Plc
“info@africanallianceplc.com”
Letters by National Record emailed to both PenCom and NAICOM enquiring if the managements of both regulators were aware of the precarious situation of pensioners serviced by African Alliance Insurance Plc and the obvious crisis incapacitating the firm’s obligations were not responded to as at press time.
Pension Expert speaks
According to an expert on contemporary pension matters in Nigeria in an interview with National Record, Comrade Ivor Takor, while there had been delays in retirement payments since the Contributory Pension Scheme (CPS) kicked off, such delays had only been due to the federal government’s slow release of funds for accrued rights of retirees who were in service before the CPS began, noting that “this is because the pension rights of these employees under the old Defined Benefits Scheme (DBS) are legally guaranteed.”
Comrade Takor, who was a two-term President of the Non-Academic Staff Union of Educational and Associated Institutions (NASU), a two-term National Treasurer of Nigeria Labour Congress (NLC) and an inaugural member of the Board of PenCom, and retired as a Director in federal service and is now a Lagos-based legal practitioner with special focus on pension matters, however stressed that “there have been no reported delays or non-payment issues under either programmed withdrawals or annuities until the recent case with African Alliance.”
He noted that the prevailing situation is odd, as according to him, the funds used to purchase the life annuity remains with the insurance firm. “This issue should not have arisen since the funds for annuities purchased by retirees with the company should already be in the company’s possession, generating returns on investments.”
Takor, who is also an alumnus of the National Institute of Policy and Strategic Studies (NIPSS), explained at length:
“Section 7(1) of the Pension Reform Act 2014 states that after a Retirement Savings Account (RSA) holder retires and makes an initial lump sum withdrawal from their RSA, the remaining balance must be sufficient to secure programmed fund withdrawals or an annuity for life, according to guidelines issued by the Commission.
“A programmed withdrawal, calculated based on an expected lifespan, involves monthly or quarterly payments managed by the retiree’s Pension Fund Administrator (PFA). Alternatively, the same section allows for the purchase of a life annuity from a Life Insurance Company licensed by the National Insurance Commission (NAICOM), with payments also made monthly or quarterly as per the joint guidelines issued by the Commission and NAICOM.
“It’s important to note that Pension Fund Administrators are regulated by PenCom, while Life Insurance Companies fall under the jurisdiction of NAICOM. After a retiree receives their lump sum, Section 7(1) of the Act gives them the choice to either opt for monthly or quarterly pension withdrawals through the programmed withdrawals managed by the PFA or to use the remaining RSA balance to purchase an annuity from a Life Insurance Company.
“Since the implementation of the Contributory Pension Scheme (CPS), delays in retirement payments have occurred, particularly for public servants, due to the federal government’s slow release of funds for accrued rights of retirees who were in service before the CPS began. This is because the pension rights of these employees under the old Defined Benefits Scheme (DBS) are legally guaranteed.
“However, there have been no reported delays or non-payment issues under either programmed withdrawals or annuities until the recent case with African Alliance. This issue should not have arisen since the funds for annuities purchased by retirees with the company should already be in the company’s possession, generating returns on investments.
“African Alliance is regulated by NAICOM, not PenCom. Nonetheless, Section 23 of the Pension Reform Act empowers PenCom to regulate and supervise the CPS and other pension schemes in Nigeria. Additionally, the guidelines for annuities were jointly issued by PenCom and NAICOM, making both agencies responsible for addressing this issue promptly to prevent future occurrences.
“Section 56 of the Pension Reform Act 2014 mandates that: “From the commencement of this Act, pension funds and assets shall only be held by pension funds custodians licensed by the Commission under this Act.” This implies that pension funds and assets, whether under programmed withdrawals or annuities, should be held by a licensed pension fund custodian, not any other entity.
“The situation with African Alliance is a serious concern that both PenCom and NAICOM must address with urgency.”
Speaking on steps affected pensioners can take, Comrade Takor counselled:
“The simplest advice I can give to the pensioners involved is that they should make a formal report to the Nigerian Union of Pensioners (NUP) and to PenCom, the pension regulatory authority, even though they are aware of the situation.
“Additionally, they should seek legal advice and consider taking action on the matter.
“NUP and the Labour Centres, Nigeria Labour Congress (NLC) and Trade Union Congress (TUC), should take up this matter with the company, PenCom, and NAICOM on behalf of the affected pensioners, bearing in mind that these pensioners were, and continue to be, their members even in retirement.
“The fundamental role of unions is to represent their members and give them a voice.
“Individually, workers and retirees don’t have a voice. The unions are there to match the enormous power of employers, governments, and other organizations, as in this case, on behalf of their members. That’s why workers join unions in the first place.”
