The move by the federal government to invest part of the N20 trillion pension fund for infrastructural project is a hazardous journey that should not be allowed to proceed.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun revealed this plan on May 14, 2024 after the Federal Executive Council meeting.
Mr Edun said the move was part of government's efforts to ameliorate the 20 million housing deficit in the country. "On the supply side, construction of houses will be funded. On the demand side, mortgages will be made available so that those constructing houses have an outlet and Nigerians who are saving so much by way of pension funds, have the added bonus of access to affordable mortgages." He said.
However, Organised Labour, experts and opposition politicians have kicked against the intended policy. In a joint statement issued by the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), the labour movement rejected the move, describing it as disheartening. According to the statement, "Nigerian workers have entrusted their hard-earned savings for retirement security, not as a means for government projects. It is imperative to halt any further plans to tap into these funds, especially given the lack of transparency and accountability in past government borrowing practices. Your proposal to further leverage these funds for the purported betterment of housing and infrastructural sectors raises serious questions about fiscal prudence and responsible governance."
Also, the Center for Pension Rights Advocacy argued that the plan may not be feasible but if implement would negatively impact pensioners. The Center's Director, Ivor Takor said "In the first place, pension funds are not liquid cash assets stored in a single bank account that the government can simply access at will. Secondly, as of March 2024, the total pension fund assets amount to about N19.66 trillion. Additionally, monthly pension payments are made from these assets, highlighting the challenges of utilizing them for other purposes without affecting pensioners."
Reacting via a post on X (formerly Twitter), Presidential candidate of the Peoples' Democratic Party (PDP) in the 2023 elections, Atiku Abubakar criticized the plan as illegal. "It is a misguided initiative that could lead to disastrous consequences on the lives of Nigeria's hardworking men and women who toiled and saved and who now survive on their pensions having retired from service. It is another attempt to perpetrate illegality by the Federal Government. The g overnment must be cautioned to act strictly within the provisions of the Pension Reform Act of 2014 (PRA 2014), along with the revised Regulation on Investment of Pension Assets issued by the National Pension Commission (PenCom). In particular, the Federal Government must not act contrary to the provisions of the extant Regulation on investment limits to wit: Pension Funds can invest no more than 5% of total pension funds' assets in infrastructure investments," he said.
Following the outrage, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun clarified that the Federal Government has no intention of acting outside the boundaries of the law. "What was announced to the Federal Executive Council was that there was an ongoing initiative drawing in all the major stakeholders in the long-term saving industry, those that handle funds that are available over a long period to see how, within the regulations and the laws, these funds could be used maximally to drive investment in key growth areas, including infrastructure, housing, and, of course, to find a way to provide Nigerians with affordable mortgages. Within this context, there is no attempt, nor is it being considered, to offer unsafe investments for pension funds or even insurance funds or any investment funds. No attempt whatsoever to increase the risk. No attempt whatsoever to lower the returns that would otherwise be earned." He stated.
Despite this clarification, we at the Daily Trust believe that this is a dangerous move no matter how well-intentioned. In a country where there is no program to take care of senior citizens, pension is the sole means of livelihood for people over 60 years or those who have served for more than 35 years. In the absence of alternative safety nets, therefore, we caution against threatening the livelihood of elderly Nigerians.
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We are witnesses to the case of Kano state where government borrowed pension funds to construct estates. The estates were indeed built but there were no buyers for the houses. This led to a cash flow problem where pensions were not able to receive their monthly payment because the funds have been tied up in non-performing investments.
Moreover there is a serious trust deficit between the Nigerian government and citizens. Previous cases of corruption and mismanagement have made us wary of any attempt by government to dabble into the pension funds.
We also wonder what happens to the savings made from the removal of fuel and electricity subsidy which the government said would be used to fund infrastructural development? What about the plethora of taxes that the government is collecting from every strata of Nigerian society? What happens to the much vaunted Public-Private Partnership (PPP) means of funding infrasture?
We therefore urge the federal government to hands off pension funds.
