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The Minister of Finance and Coordinating Minister for the Economy, Wale Edun, the other day, announced the government’s intention to access N20trillion from the nation’s pension funds. He made the disclosure when he spoke with State House Correspondents after the Federal Executive Council (FEC) meeting in Abuja. He said the funds would be invested in infrastructure as a key driver of economic growth in view of the current soaring inflation and interest rates.
Beyond that, he stated that tapping into the N20trillion pension pool should be seen as a strategic step towards implementing President Tinubu’s ambitious economic agenda. He also described the pension funds as idle funds that should not be allowed to remain dormant. This attempt to use the pension funds is most insensitive, and the Minister’s description of the workers’ hard-earned money as idle funds is even more uncharitable and unacceptable. The plan runs contrary to the legal statutes establishing the pension funds.
It is, therefore, no surprise that the move has been strongly opposed by Nigerian workers. Pension experts and Organised Labour have decried the move, particularly the risks associated with such plan as it will severely jeopardize workers’ financial security at retirement. The envisaged plan simply flies in the face of reality. This is because pension funds are not meant to be used as a quick fix for infrastructure development, no matter how laudable the projects may be.
Strictly, pension funds are not liquid cash assets stored in a single bank account. This poses a formidable obstacle to government’s proposal. Nigerians are wondering where government wants to source the required humongous amount of N20trillion that the minister talked about. As of March 2024, the total pension funds assets stood at N19.66trillion, with monthly pension payment being made from these assets.
Therefore, diverting these funds to other purposes will definitely impact negatively on the retirees’ financial security, especially at this point in time of extreme economic hardship. Let the government jettison the plan. According to law, only the National Pension Commission (PenCom) and the Pension Fund Administrators (PFAS) are solely and statutorily responsible for investing pension funds.
This is clearly stated in Section 18(c) of the Pension Reform Act 2024. The Act also empowers PenCom to regulate, supervise and ensure the effective administration of all pension matters and retirement benefits. The question that arises from the foregoing is: what legal framework gives the government the authority to use the pension funds? Available statistics on the investment of pension fund assets show that about 70 per cent of pension funds are already invested in government securities.
There is even nothing left for the government to borrow. We urge the government to borrow from other sources for its infrastructural development projects like roads, railways and housing.
Government should consult widely before embarking on any big project that requires huge funding. This will ensure public acceptability and minimise risks. The reasons given by the Finance Minister that government had no intention of increasing the risks associated with the pension fund or jeopardising its security is an afterthought.
Former President Muhammadu Buhari attempted to do exactly the same thing with the pension funds, but jettisoned the idea following opposition by many stakeholders. Government should abide by the rules in the financial sector that guide access to pension funds. Anything contrary to the rules and regulations should be avoided.
We reiterate that no one, including government should risk the future of pensioners and their families in the name of borrowing money from the pension pool. While it is not in doubt that pension and insurance funds in other countries had at certain times been deployed for infrastructure purposes, the case of Nigeria is different for many reasons.
The government cannot be trusted by the people for obvious reasons. There is even no assurance that those who tampered with pension funds will be diligently prosecuted. The best alternative for the government to access funds to meet its infrastructural facilities is to embrace the Public-Private Partnership (PPP) model. It is safer and less controversial.
