PenCom Warns PFAs About Death Benefit Payments

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’ Retirement 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).

“Requests for payment of additional death benefit claims to
legal beneficiary(ies) must be submitted through the Benefits and
Insurance Department’s dedicated email. The Commission will review
requests for payment of death benefit claims and approve or decline
the requests; and on no account should additional death benefit
claims be paid to legal beneficiary(ies) without the Commission’s
approval.

“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.

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’ Retirement 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).

“Requests for payment of additional death benefit claims to
legal beneficiary(ies) must be submitted through the Benefits and
Insurance Department’s dedicated email. The Commission will review
requests for payment of death benefit claims and approve or decline
the requests; and on no account should additional death benefit
claims be paid to legal beneficiary(ies) without the Commission’s
approval.

“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.