IPEC reviews annual pension benefit commutation to $36k
The Insurance and Pension Commission (IPEC) has reviewed the annual pension benefit commutation to $36 000 from $6 000 taking into account the prevailing macro-economic environment.
The commission also announced that a pensioner who receives $36 000 and below as pension benefits per annum, now qualifies to receive his or her full benefits at once rather than having the money preserved for regular payouts.
In a circular issued on July 21, 2021, IPEC said prior to gazetting into law by the Government, it is exempting the pensions industry, in terms of section 24 of the Pension and Provident Funds Act (Chapter 24:09), from applying the prescribed minimum pension of $6 000 in the determination of commutation and preservation.
“The monthly pension applicable for commutation and preservation purposes is currently pegged at $6 000 per annum, which translates to $500 per month, this amount has become very low,” said IPEC.
In this context, the commission submitted proposed amendment of regulations prescribing minimum pensions to the Ministry of Finance and Economic Development.
“The commission hereby exempt the pensions industry, in terms of section 24 of the Pension and Provident Funds Act (Chapter 24:09), from applying the prescribed minimum pension of $6 000 in the determination of commutation and preservation.
“In line with this exemption, the pensions industry shall apply $36 000 in the determination of commutation and preservation amounts. The application of this revised amount is with immediate effect,” it said.
In view of the plight of pensioners, in particular the urgent need to cushion them, the commission said an upward review of the minimum pension in the determination of the qualifying criteria for commutation and preservation purposes was ideal.
By reviewing the annual commutation, IPEC also aims to enhance the monetary value realised by exiting fund members through the application of a reviewed minimum pension in the determination of commutations.
The commission also seeks to promote the welfare of pensioners to take into account the current macro-economic environment.
Meanwhile, IPEC has dismissed reports circulating on social media platforms that it has registered an entity or product under the banner Lobola Assurance.
“IPEC’s attention has been drawn to a flier, under the banner Lobola Assurance, that is circulating on social media platforms.
“We wish to advise the public that we have not licenced such an entity nor the purported product,” said the commission.
Section 7 (1) of the Insurance Act, prohibits unregistered entities from carrying out insurance business.
“We would like to remind insurance consumers to only deal with registered entities. Consumers can check with the Insurance and Pensions Commission, entities that are authorised to render insurance services,” it said.
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