The intention of the Federal Government to borrow N 2 trillion from the N10 trillion accumulated pension fund is incorrect as the fund cannot be borrowed by law, a pension expert, Ivor Takor has said.
Takor, who is the Director, Centre for Pension Right Advocacy, made this known in a submission by advocacy group on alleging that the Federal Government intend to borrow the huge cash from pension fund to develop infrastructure.
He stated that pension fund is about investment and not borrowing, adding that Pension Fund Administrators (PFAs) are investing organisations and not borrowing organisations.
The fund, he said, is warehoused in the private individual Retirement Savings Accounts (RSAs) of contributors, who are workers cum beneficiaries.
He said part of the centre’s submission is that the Contributory Pension Scheme (CPS) has created a huge pool of long term investable fund, which should be utilised for infrastructural development but it should be done within an agreed framework put in place by all critical stakeholders.
He said: “The funds are invested by the Pension Fund Administrators on behalf of the workers, based on guidelines issued by the regulator. The investment is carried out with two principal objectives, which are adequate return on investment and the safety of the fund.
“Our position at the Centre for Pension Rights Advocacy on the matter is that as at January 21, 2020, pension fund assets under the CPS had risen to N10 trillion. This is a very good development for an industry that on its take off in June 2004, had a federal public sector pension liability. Pension funds in nature contribute to a nations huge pool of long term investable fund. Therefore, it should not come as a surprise to anyone that the huge pension fund assets in the country will attract the attention of the Federal Government for infrastructural development.
“Therefore, we are stating categorically without any fear of contradiction, that pension fund is about investment and not borrowing. PFAs are investing organisations and not borrowing organisations. The spirit and letters of the Pension Reform Act 2014 envisage investment of pension fund and not borrowing of the fund. The government, PenCom and Pension Operators know this very well. We are aware that a committee is studying and working out modalities of how a huge sum of pension fund can be invested in infrastructure.”
He said the centre sees this as a good development because the law and guidelines for investment of pension fund, makes provision for investment in infrastructure.
“However, we want to believe and advise that critical stakeholders in the industry, especially workers who are the owners of the fund are being carried along through their representatives, the industrial Unions and the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC). It should be noted that their understanding and buy in, in such huge investment is extremely important. There is a popular maxim that you cannot shave the hair of a person, in his/her absence. PFAs who are businesses have the interest of their shareholders first and other person or individuals are secondary while trade unions have the interest and welfare of their members as their principal objective. It is for that reason that they are established.
“We want to point out that RSAs of workers are not guaranteed by the federal and state governments nor any other organisation for that matter. The accounts and the funds in them are open to operation and investment risk, which is borne by the owners of the accounts. Therefore, their representatives must have a say on any critical decision on the contents of the accounts.
“The law doesn’t confer on the Federal or state governments, the power to decree or order how the funds in private individuals Retirement Account should be invested. They can negotiate the terms and conditions under which they are ready to do business with those who have legal ownership and power to invest the fund.
“We conclude by submitting that the CPS has created a huge pool of long term investable fund, which should be utilised for infrastructural development. This should be done within an agreed framework put in place by all critical stakeholders,” he added. (The Nation)
