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Isaac Anumihe, Abuja
The National Pension Commission (PenCom) yesterday allayed fears raised over Federal Government’s plan to borrow N2.0 trillion from the over N10 trillion assets, saying that the rigorous and difficult investment guidelines will not permit borrowing from the fund.
However, if the government presents a good investment instrument that guarantees security and good returns, the Pension Fund Administrators are at liberty to invest in it.
Speaking to Daily Sun in Abuja, PenCom spokesman, Peter Aghahowa, said that to ensure security of the fund, the regulators have developed very expansive and comprehensive investment guidelines to guide the kind of investment the PFAs will make. He also said the regulators have also specified the limits on investments which the PFAs must abide by.
“What the regulators have done is that we have come out with very expansive and comprehensive investment guidelines to guide the kind of investment they (PFAs) will make. We have even specified limits on assets. It is something very detailed and very rigorous. If those funds are to be invested they are going to be invested within the assets classes. For example, treasury bills, infrastructure bonds and all those kind of things. So, if an instrument is coming out in line with that investment guideline, PFAs have the liberty to invest in it because what they want for the contributor is very good return and security because nobody wants to retire and at the end of the day he would not see his money. So, these are the funds that are invested. So, when people say that government wants to borrow money, it is like saying that you are going to take money from somebody’s account.
“If the government provides instrument that meet investment guidelines, the PFAs will call their investors—–the PFIs who are the professionals—-they will look at it. If it meets their requirements in terms of providing fair returns and safety, they will invest. They also have the liberty to say well, we have looked at it, we have analysed it and we are not going to invest. So, these are purely professional decisions” he said.
The Federal Government, at the weekend, gave indications it could be borrowing N2.0 trillion pension fund to construct roads and houses.
Minister of State for Budget and National Planning, Prince Clem Ikanade Agba, gave the indication, saying: “We are also taking steps to increase our non-oil revenue generation.
The steps include but not limited to Value Added Tax (VAT) reforms in the Finance Act 2020 (maintaining the increase in VAT rate to 7.5 per cent); customs administration endowment; tax incentives and exemptions; increase remittances and recovery of unremitted revenues from GOEs; increase revenues from cross-border business transactions; unlock value from Federal Government assets that are lying idle or under-utilised; incentivise the use of up to N2.0 trillion of pension funds for roads and housing developments.”
