The National Pension Commission (PenCom) has warned Pension Fund Administrators (PFAs) that violates the procedures on death benefit payments.
The commission has threatened to punish the PFAs that paid death benefit payments without following due process.
Subsequently, the commission has stopped the operators from paying more inflows into deceased employees’ Retirment Savings Account (RSA), advising them to get approval after initial approvals had been given.
The circular with reference number PENCOM/INSP/CIR/SURV/20/1383 to licensed pension fund operators entitled: “Cessation of payment of death benefit claims to legal beneficiaries without Commission’s approval”dated December 1, 2020, reads: “Please recall the Commission’s directive to PFAs via its letter dated 16 May 2013 to pay additional inflows into deceased employees’ RSA to legal beneficiaries, 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 payments 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. Consequently, the following procedure should be followed by PFAs in the processing, approval and payment of death benefit claims.”
The commission stated that requests for payment of initial death benefit claims to legal beneficiaries should be submitted to the commission for approval via the Risk Management Analysis System (RMAS).
“Appropriate sanctions would be imposed on PFAs for violation of the above procedure for death benefit payments. This circular supersedes the commission’s letter of 16 May, 2013 on the payment of death benefit claims and is effective from December 1, 2020,” the added.
