Pension experts have said the over N11.57 trillion pension funds asset cannot be borrowed, adding that its idle as speculated.
This is coming on the heels of a report that governors had last week, proposed to borrow about N17 trillion from the pension funds at a time the total asset is N11.57 trillion.
To this end, the experts revealed that it’s an indication that most government officials are bereft of the terms and conditions of the Contributory Pension Scheme (CPS).
The director, Centre for Pension Rights Advocacy(CPRA), Mr. Ivor Takor, who said that pension funds were not designed for borrowing, noted that “Pension funds are for investment. That is what is provided in Section 86 of the Pension Reform Act 2014.”
Takor maintained that Section 86 of the Pension Reform Act 2020 provides that subject to the guidelines issued by the commission, pension funds and assets shall be invested as prescribed in paragraphs (a) to (i) on “specialist investment funds and such other financial instruments as the commission may, from time to time approve”. “Infrastructure is a financial instrument, which pension fund can be invested in”, he added.
“There are guidelines for investment issued by the National Pension Commission (PenCom). The spirit behind the investment of pension funds is two: security of the investment and adequate return on investment.
“I know that as a member of the pioneering board of PenCom, that the commission will never compromise on this”.
He noted that pension funds are not in PenCom’s account, nor the account of any Pension Fund Administration (PFA) or even in the Central Bank of Nigeria (CBN) that any governor can just go there and borrow.
The funds, he maintained are in individual Retirement Savings Accounts of contributors, stressing that the principal word for the pension fund is an investment not borrow.
“We should stop interchanging these two words as they are not interchangeable words in the pension industry.
Borrow is not even a lexicon in pension language,” he advised.
Similarly, the chief executive officer of Pension Fund Operators Association of Nigeria (PenOp), Oguche Agudah, said the report of the N17trillion is sensational and do not capture the full thrust of the issue, noting that what is being referred to is a proposed infrastructure fund to be professionally managed by the Nigeria Sovereign Investment Authority (NSIA).
He posited that there will be a legal and commercial framework in place for the proposed infrastructure fund, adding that, “to the best of the association’s knowledge, this is still in the proposal stage and when its finalized, PenCom can decide if they will invest in the fund and what level of investment that will benefit them”.
“The industry has recorded some successes on infrastructure funding across the country by investing in power plants, student accommodation, roads, telecommunication infrastructure, among others,” he submitted.
PenCom had earlier said the pension fund assets stood at N11.57 trillion as at September 30, 2020, adding that a breakdown of the pension industry portfolio indicated that the pension funds were mainly invested in federal government securities, with an allocation of about 65 per cent of the total pension assets (FGN bonds: 57 per cent, treasury bills: seven per cent, Sukuk bonds: one per cent while agency bonds and green bonds account for less than one per cent).
