To clamp down on fraudulent death benefits and claims that do not meet required internal control measures, the National Pension Commission has stopped death payments to legal beneficiaries by the Pension Fund Administrators without approval.
In a circular titled ‘Cessation of payment of death benefits claims to legal beneficiaries without commission’s approval’, PenCom said it noted increase in death payments that did not meet required internal control measures.
The circular was dated December 1, 2020 was obtained by our correspondent on Friday.
The commission had earlier put in place stringent measures after it raised an alarm that some fraudsters were collecting pensions of some living contributors.
PenCom’s recent circular read, “Please, recall the commission’s directive to Pension Fund Administrators via its letter dated 16 May 2013 to pay additional inflows into deceased employees’ Retirement Savings Accounts to legal beneficiary(ies) after initial approval has been obtained.
“However, the commission has noted in recent times increase in death payments that did not meet the required internal control measures.
“Hence, the need to strengthen the death payment process.
“Accordingly, the commission directed the immediate cessation of payment of additional death benefit claims without the commission’s approval.”
Going forward, it stated, the PFAs must comply with its new directives which took effect in December 2020 in the processing, approval and payment of death benefit claims.
It stated that the commission would review requests for payment of death benefit claims and approve or decline requests.
Appropriate sanction would be imposed on PFAs for violation of the procedure for death benefits payments, it stated.
The commission, “This circular supersedes the commission’s letter of 16 May, 2013 on payment of death benefit claims.”
Figures obtained from PenCom disclosed that a total number of deceased employees’ relatives from both public and private sectors totalling 59,057, were paid N186.21bn as of the end of third quarter of 2019, according to its quarterly reports.
PenCom also disclosed that it paid N8.58bn to 1,864 beneficiaries as of the fourth quarter of 2019.
In first, second and third quarters of 2020, it said it paid N9.34bn, N2.58bn and N8.56bn to 2,086, 591 and 1,821 beneficiaries respectively.
This amounted to a total amount of N215.27bn paid to 65,419 relatives of deceased workers.
Earlier, the commission had disclosed that some unidentified fraudsters under the disguise of being relatives of workers and retirees under the Contributory Pension Scheme had been approaching the PFAs to collect the pensions of contributors.
The fraudsters, who had been deceiving the PFAs with fake documents, successfully collected the pension benefits of some living workers and retirees after providing evidences’ that they were dead.
This led PenCom to introduce stringent measures to stop the menace.
It revealed this in an earlier circular titled ‘Revised procedures on processing of death benefits’.
In the circular, it stated, “The commission has received series of complaints from retirees, who alleged that their PFAs have wrongfully paid their benefits to their next of kin or legal beneficiaries, while they are still alive and in active service without their consent.
“Following these complaints and reports by the PFAs, it has become imperative to issue additional measures to curb these complaints and strengthen the processes and practices of processing and payment of death benefits.”
PenCom stated that some of the measures it introduced were that henceforth, PFAs would be required to enhance their internal controls and carry out further investigations on the documentation submitted by the next of kin/ legal beneficiaries of the deceased before forwarding such to the commission for approval.
The regulator also stated that the PFAs must ensure due diligence and conduct search at the probate registry of the issuing authority to confirm the genuineness of the documents as well as the verification of the information of the named administrator and sureties.
It stated, “All PFAs shall henceforth be required to contact the employer of the deceased on verification and/or confirmation of death of employee.
“The PFAs shall ensure that the affixed current passport photograph of the next of kin/legal beneficiary shall be certified by the deceased’s employer.
“Next of kin/legal beneficiaries shall be required to submit a valid means of identification or a letter from a notary public, where a means of identification is not readily ascertainable.”
The commission also instructed the PFAs to confirm the death certificates of the deceased issued by hospitals as well as the police report, where death was by accident.
According to PenCom, the officer of the PFA that undertakes the due diligence in the probate registry, hospital or police authority must write and sign a report on the findings.
It added that it would ensure that the appropriate beneficiaries would be identified by the PFAs in the event of payment to wrong beneficiaries.
“All PFAs are required to note that the above measures are for immediate implementation and sanctions for infractions shall be in line with the extant regulation on the administration of retirement and terminal benefits,” the commission added.