Group Counsels FG on Plan to Use Pension Fund for Infrastructure Devt
The Centre for Pension Right Advocacy, a body made up of experts in pension administration, who contributed to the enactment of Pension Reform Act 2004 amend in 2014, has advised the federal government on the best approach to borrow N2 trillion from the existing N10 trillion pension assets for infrastructural development.
The group stressed the need to carry stakeholders, such as the workers’ unions along in the process.
The Managing Director of the Centre, Mr. Ivor Takor, who stated this in response to enquiries by THISDAY, said: “We have read in print and online media, we are stating categorically without any fear of contradiction, that pension fund is about investment and not borrowing. Pension Fund Administrators (PFAs) are investing organisations and not borrowing organisations.
“The spirit and letters of the Pension Reform Act 2014 envisage investment not borrowing. The government, PenCom and Pension Operators know this very well.
“We are aware that a committee is currently studying and working out modalities of how a huge sum of pension fund can be invested in infrastructure.
“To us at the Centre, we see the development as a welcome one because the law and guidelines for investment of pension fund, makes provision for investment in infrastructures.”
However, he, stressed the need for critical stakeholders in the industry, especially workers, who are the owners of the fund to be carried along through their representatives, the industrial unions such as 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 run the 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,” Takor stated.
According to him, Retirement Savings Accounts (RSA) of workers are not guaranteed by the federal and state governments nor any other organisation.
“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,” he added.
He noted that the law didn’t confer on the federal or state governments, the power to decree or order how the funds in private individuals’ RSAs 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.
“The governments especially the federal government, should have at the back of its mind the fact that some of the owners of the fund who have retired, are yet to be paid their retirement benefits as a result of federal government delays in paying their accrued rights of pension under the defunct Defined Benefits Pension Scheme.
“Moreover, the Federal Republic of Nigeria constitution as amended 2011, provides that pensions shall be reviewed with every public service salary review or every five years, where there is no salary review.
“There was a salary review, with consequential 33 per cent pension review for pensioners under the defunct Defined Pension Scheme and other pension adjustments without a consequential adjustment of pensions of pensioners under the Contributory Pension Scheme,” he noted.