The demand for retiree life annuities is rising as more Nigerians seek financial security in old age amid economic uncertainty.

With life expectancy increasing and inflation eroding savings, retirees are prioritising investments that guarantee a steady income for life. Unlike other retirement options that may deplete over time, annuities ensure consistent payouts, providing a crucial financial safety net regardless of how long one lives or how the economy fluctuates.

For many, it is not just about retirement—it is about peace of mind in an unpredictable world.

In Nigeria, life expectancy at birth (years) has improved by 9.34 years from 54.1years in 2000 to 63.4 years in 2021, according to latest data from the World Health Organisation.

This has driven a growing preference for retiree life annuities over programmed withdrawals under the Contributory Pension Scheme (CPS), as retirees seek guaranteed income for life rather than the risk of outliving their savings.

Section 7(1a), of the Pension Reform Act 2014 states that an employee on retirement shall procure Annuity for Life Policy or Programmed Withdrawal.

The lump sum for the procurement of an Annuity for Life Policy or Programmed Withdrawal must have been accumulated through a series of employer/employee contributions into the Retirement Savings Account (RSA) of the retiring employee throughout his/her working career.

Data from the National Pension Commission (PenCom) shows that between 2020 and the third quarter of 2024, 185,270 retirees chose life annuities, while only 131 retirees opted for programmed withdrawals.

The Commission said that life insurance companies offering annuity have so far since inception of the CPS received N689 billion as premium from retirees.

PenCom said ‘there is a significant show of confidence in financial security during retirement as Nigerian retirees have collectively invested a staggering N689 billion in annuity premiums.

Okolomba Louis, an insurance broker, said the bold move underscores a growing trend among retirees to secure a stable income stream as they transition from their professional lives.

“With life expectancy on the rise and the cost of living continuing to increase, retirees are increasingly looking to insurance companies to safeguard their financial futures,” Louis said.

“This payment of premium for annuity not only reflects the desire for a comfortable retirement but also highlights the important role of the insurance sector in providing financial solutions that cater to the specific needs of retirees,” Louis said.

Chika Onwunali, partner at Premium Debate said, “with life expectancy increasing and the cost of living rising, more and more people are looking for ways to ensure they have a guaranteed income for life.”

Onwunali said one of the factors driving uptake of annuity is the introduction of regulations that make annuities more attractive to consumers.

“Though, I am yet to see such in the pension regulation except with individual insurers, particularly when you consider freebies accruing to participants in programmed withdrawal made possible by PenCom.”

Akin Iguoba, president of the Retired Customs Officers Association of Nigeria, said he first learned about AIICO Insurance’s annuity product through friends in the early 2000s and decided to sign up in 2014.

“Over the years, AIICO has proven to be a reliable partner, with a strong track record and a consistent payment system that ensures financial stability in retirement. This trust has led us, at the Retired Customs Officers Association of Nigeria, to not only introduce fellow retirees but also engage actively serving officers, encouraging them to secure their future with an annuity plan,” he said.

Imelda Anyanwu, another annuity customer with AIICO stated “I have been on an annuity plan for 12 years since retiring from Union Bank, and my experience has been exceptional.”

“My choice was based on a strong recommendation, and it has proven to be the right decision. Beyond the consistency and timeliness of payments, what truly stands out is the human touch – the warmth, responsiveness, and professionalism of the staff. They are always ready to provide support, making th experience seamless and reassuring,” Anyanwu said.

Gbenga Ilori, executive director and head of Retail Business, at AIICO said “we understand the importance of financial stability especially during retirement. Our annuity product is designed to address this very need, offering our customers peace of mind with guaranteed monthly payouts for life.”

“We are proud to be a part of their financial journey,” Ilori said.

“We are confident that the annuity market holds immense potential, and we are well-positioned to capitalize on this growth. Our robust financial standing and exceptional customer service ensure that our annuity policyholders receive not only a guaranteed income, but also peace of mind throughout their retirement life.”

The United Nations Population Division (UNPD) also reported that Nigeria has witnessed a modest growth in life expectancy over the past two decades.

“In 2000, the total life expectancy stood at 47 years, with women 48 years slightly outliving men 46 years. The total life expectancy rose to 55 years in 2024, with women constantly maintaining a higher life expectancy than men, reaching 55 years, compared to 54 years for men,” UNPD said. (BusinessDay)