The annuity manager at SANLAM Life Insurance, Victor Ikechukwu, has urged civil servants due for retirement to take out an annuity policy to effectively manage their pension.

Mr Ikechukwu disclosed this on Monday in Enugu while speaking on pension management.

The insurance expert explained that an annuity was administered by the National Insurance Commission and paid for the lifetime of a pensioner.

“It is a pension package that a pensioner receives till death, and it is programmed.

He, however, said that the package differed from the Programme Withdrawal offered by the Pension Fund Administrators, which lasted only until the money was exhausted.

He said that once the money was exhausted, the pension stopped automatically, unlike annuities, which were covered by insurance.

Mr Ikechukwu also advised retiring civil servants that, at the commencement of retirement, they should demand a pension payment template.

According to him, the template contains pension option policies and rules governing them, as well as a statement on their payable gratuity.

“The template gives two pension policy options, which are Annuity Policy and Programme Withdrawal Policy. The Annuity Policy is a better option, which includes paying the retiree for life as long as he or she is alive.

“Two, since the Annuity Policy is like a Life Assurance Policy, the retiree got more monthly retirement pension, unlike his other colleagues in the Programme Withdrawal Policy.

“The difference between the Annuity Policy and the Programme Withdrawal Policy most times is not explained to the retiree to make an informed choice. Rather, most pension managers hurry the retiree up and tell him or her to go home, while subjecting them to the Programme Withdrawal Policy,” he said.

Mr Ikechukwu alleged that the pension managers, who intentionally put retirees under the Programme Withdrawal Policy, did so on their own to continue managing retirees’ pensions after gratuity had been paid.

“Most times, those under the Programme Withdrawal Policy, their total pension money runs out between 10 and 13 years while alive. The reason why it might extend beyond 10 years is the interest accruing from the investment made with the bulk of the pension money in the first place,” he said.

He, however, noted that under both policies, if a retiree died within 10 years, his or her family members could claim the remaining retirement pension benefits.

“But if the retiree dies after 10 years, the pension will automatically stop, notwithstanding the policy. The next of kin or family members cannot have any claim after the deceased retiree must have enjoyed his gratuity as well as pension for over 10 years.”

(NAN)