The National Insurance Commission says it is working at developing annuities market to manage lump sums for pensioners following the announcement by the Social Security and National Insurance Trust (SSNIT) that workers who turn 60 from January 1, 2020, will no longer receive lump-sum payments.
SSNIT’s announcement directed the contributors to turn to the fund managers of their second-tier contribution for the lump sums.
But Deputy Insurance Commissioner, Michael Andoh believes that developing the annuities market will help provide a steady stream of income for pensioners while providing some cash flow for the government’s operations.
Typically, an annuity is a financial product that pays out a fixed stream of payments to an individual; these financial products are primarily used as an income stream for retirees.
“It will be good for us to do that because it will give us a very patient long-time capital. This is the payment until the person dies and so it that big money can be used to build infrastructure and develop something that will generate regular cash flows for the person. And that is what the government needs,” he said.
“If we can create that kind of market, we will just harvest all these lump sums and put them somewhere and pay regular cash flow to these people until they die,” Mr. Andoh noted.