The death incidents have put pressure on the company as the firm had to pay compensation for death benefits to the diseased staff families.
Incidentally, rather than push the burden of compensation to insurance companies whose responsibility it is to settle diseased families in such situation, the company had to bear the burden because it failed to take group life insurance for its employees, as provided in the Pension Reform Act 2014.
According to the law, any employer that fails to take up this insurance for its employees will be mandatorily responsible to provide that compensation in the event of employee death.
So, it pays a company to take insurance for her employees, as this does not only motivate the staff for improved productivity and growth of the economy, it gives the company rest of mind to concentrate on other operational issues.
The Act stipulates that every employer, to which this applies, must maintain a life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee.
Under the policy, total annual emolument is defined as the basic salary, transport and housing allowances and shall not include bonuses, overtime, directors’ fees or other fluctuating emoluments.
According to the guidelines, the employer is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to the contributions to be made by the employer to each employee’s Retirement Savings Account.
The policy provides cover to the insured against death and the insurance cover is mandatory for all employees as long as they are in employment.
This means that the policy provides for the payment of the sum assured in the event of the death of a member of the scheme from any cause, natural and accidental.
Given the importance of complying with this policy, employers are expected to pay their premium before commencement of the cover, as there is a law guiding payment of premium and effective death of cover.
This is why the National Pension Commission (PenCom) at this time of the year mandates employers of labour to take this insurance as precondition to participate in government contracts and businesses.
PenCom year on year, gives employers of labour at the Federal, State and the private sector up to 31 March 2020 to comply with the Pension Reform Act 2014 on provision of life insurance cover for employees, or assume to have breach the law.
Besides that, PenCom also gave employees the mandate to report any employer that fails to comply with this provision, as well as other provisions of the PRA 2014 including pension remittances to the Pension Fund Custodians (PFCs).