Nigerian retirees under the Contributory Pension Scheme invest over N798 billion in life annuity as part of their retirement strategy
By the second quarter of 2024, Nigerian retirees invest in life annuity totaling N798.58 billion under the Contributory Pension Scheme (CPS). This growing investment, involving 129,435 retirees, marks a 20% increase compared to N665.13 billion recorded in 2023, according to the National Pension Commission (PenCom).
As part of their retirement strategy, these retirees—also known as annuitants—are securing monthly or quarterly pension payments by opting for life annuities. Section 7(1a) of the Pension Reform Act 2014 mandates retirees to procure either an Annuity for Life Policy or Programmed Withdrawal, funded by contributions made throughout their working careers.
Niyi Onifade, the managing director of Heirs Life Assurance Company, highlighted the benefits of the life annuity option, stating that it provides retirees with financial security for life. This investment assures pensioners of a steady income during their retirement years, allowing them to live confidently despite the uncertainties of the future.
The increasing awareness about the benefits of life annuities has driven more Nigerian retirees to invest in life annuity policies. In the second quarter of 2024, out of the 129,435 retirees who chose life annuity, 68,048 were federal government employees, 18,837 were from state governments, and 42,514 were private-sector workers.
This trend highlights the growing confidence in annuity products, with leading insurance firms like AIICO Insurance Plc disbursing around N1.3 billion monthly to their annuitants. AIICO’s executive director, Gbenga Ilori, affirmed that their annuity product offers retirees peace of mind with guaranteed monthly payouts for life.
As more Nigerian retirees invest in life annuity, insurance companies continue to expand their reach, ensuring long-term financial security for pensioners. Through strategic acquisitions, such as AIICO’s integration of Tangerine Africa’s annuity portfolio, these firms are positioned to capitalize on the growing annuity market.
In an economy where inflation and the cost of living continue to rise, annuities provide retirees with a reliable source of income, ensuring they are financially prepared for life after work. This investment strategy will likely see further growth as retirees seek more secure ways to safeguard their financial futures.
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