RECESSION: OPERATORS UNCOMFORTABLE AS FG EYES N5.8 TRILLION PENSION FUND

Pension operators in the country are increasingly getting uncomfortable with the moves being made by the Federal Government to use part of the N5.8tn Contributory Pension Scheme assets to fund infrastructure development and move the nation out of economic recession.



Operators, who spoke to one of our correspondents, said it was wrong for government officials and senators to accuse the administrators of the CPS of holding on to the fund when the economy was going through a difficult time.

They insisted that contrary to that position, the fund was actually not idle.

“Despite the fact that we have been explaining that the fund is not idle but is invested wisely, because it belongs to the contributors and retirees who subscribe to the scheme, it is disturbing that government officials have continued to display their level of ignorance on how the scheme works by demanding that we should release the money to them,” one of the operators, who spoke on the condition of anonymity said.

The Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu, said on Wednesday that there was a need for the government to provide adequate guarantees to secure investment of the fund in infrastructure.

She stated this at the African Pension Awards, which was organised as part of activities for the World Pension Summit.

There have been calls by stakeholders in the public and private sectors that the fund should be spent on addressing the infrastructural gap in the country.

However, Anohu-Amazu said while the commission was not opposed to the idea of deploying the pension fund for infrastructure, adequate mechanism must be put in place to ensure its safety.

The PenCom DG explained that pension funds alone would not be able to address the infrastructure needs of the country, adding that other sources of funding such as Public-Private Partnership arrangements should be explored.

She said, “Today, pension and social security systems serve as catalysts for generating pool of long term investible funds that can be used to develop necessary ingredients for economic development such as infrastructure.

“Given the current global economic challenges occasioned by the drop in commodity prices, the funds generated under viable pension schemes have become veritable sources of financial intermediation.

“In order to support economic development, it is fundamental that the pension fund is diversified to include investment in identifiable infrastructure, real estate and other key aspects of the real economy.

“In achieving this, pension funds require adequate guarantees by the government, in addition to the development of the enabling vehicles through which the investments will be made.”

Former President Olusegun Obasanjo had warned at the World Pension Summit on Tuesday that while the pension funds could provide the needed funding for developmental projects, caution must be taken in order not jeopardise the objectives of the pension scheme.

Obasanjo, whose administration was instrumental to the establishment of the CPS in 2004, said with the fund rising to about N5.8tn, there would always be the temptation to tamper with it for other compelling needs such as infrastructural development.

He said, “I am particularly happy that what we put together 10 years ago has become so successful that we have well over seven million employees captured from both the public and private sectors, and as you have heard, we have almost N6tn in pension assets.

“I like innovation and I like what you are talking about in the next two days – pension innovations and sustainability – but I will add two things. Your innovation must be with caution.

“When people have to work all the days of their lives that they are strong and they make contributions for their future, we cannot be too adventurous with the so called innovation because when they need the money, the money must be there.”