The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, yesterday, clarified that the federal government had no intention of illegally tapping into the N20 trillion pension funds for infrastructure development.The clarification followed media reports quoting the minister as saying, after the last Federal Executive Council (FEC) meeting, that the federal government was considering tapping into the pension funds to drive investment in growth areas, including infrastructure and housing.
The Minister, Edun had said the move to use the pension funds was part of the government’s efforts to bridge Nigeria’s estimated 20 million housing deficit, and to provide massive housing and mortgage loans at 12 per cent interest rates, with 25-year repayment plans.The minister’s comments immediately ignited serious reactions from notable Nigerians, including the former vice president, Alhaji Atiku Abubakar, who advised the federal government to suspend such a move. Atiku said the move was misguided and potentially disastrous for retired Nigerians, who were dependent on their pensions
Organised labour, led by Nigeria Labour Congress (NLC) and Trade Union Congress (TUC), also yesterday warned the federal government not to tamper with the workers’ pension fund.However, in a statement he personally issued yesterday, Edun said the stories making the rounds that the federal government planned to illegally access the hard-earned savings and pension contributions of workers were false.He stated that the pension industry was guided by rules, adding that the government will be strictly guided by extant rules in accessing the pension funds of workers.The minister explained that government will not go outside the stipulated limitations on what the funds could be invested in, to guarantee safety of the workers’ pension.The statement read, “It has come to my notice that there are stories making the rounds that the federal government plans to illegally access the hard-earned savings and pension contributions of workers. Nothing could be farther from the truth.“The pension industry, like most the financial industries, is highly regulated. There are rules. There are limitations about what pension money can be invested in and what it cannot be invested in.
The federal government has no intention whatsoever to go beyond those limitations and go outside those bounds, which are there to safeguard the pensions of workers.“What was announced to the Federal Executive Council was that there was an ongoing initiative drawing in all the major stakeholders in the long-term saving industry, those that handle funds that are available over a long period to see how, within the regulations and the laws, these funds could be used maximally to drive investment in key growth areas, including infrastructure, housing, and, of course, to find a way to provide Nigerians with affordable mortgages.“Within this context, there is no attempt, nor is it being considered, to offer unsafe investments for pension funds or even insurance funds or any investment funds. No attempt whatsoever to increase the risk. No attempt whatsoever to lower the returns that would otherwise be earned.
“It is important to remember that the federal government possesses the ability to provide guarantees where stocks are needed in order to unlock funding that will lead to growth, creation of jobs and alleviation of poverty.“It is an ongoing conversation, a challenge, a test for the best and the brightest in the financial industry to come up with solutions that, while safeguarding the long-term savings do provide an avenue that help to boost growth in the economy.”However, just as Edun’s clarification hit the news stand yesterday, NLC and TUC wrote warned the federal government not to tamper with the workers’ pension fund.
The labour movement said apart from the lack of transparency trailing the government’s move, seeking to borrow from the fund was not backed by the Pension Act.In a joint protest letter to the federal government, signed by NLC President Joe Ajaero and TUC Deputy President Etim Okon, organised labour urged the government to reconsider its plans to tap further into pension funds and, instead, explore sustainable financing options that did not compromise the retirement security of Nigerian workers.The statement said the recent announcement by the finance minister regarding the government’s intention to utilise the pension funds of N19.66 trillion for infrastructural development had ignited deep apprehension and unrest among Nigerian workers, who were the primary contributors and eventual beneficiaries of the funds.
It said the revelation that the government had already accessed nearly 70 percent of the entire pension fund value was not merely alarming, but also utterly unacceptable.Labour said in the statement, “Nigerian workers have entrusted their hard-earned savings for retirement security, not as a means for government projects.“It is imperative to halt any further plans to tap into these funds, especially given the lack of transparency and accountability in past government borrowing practices.“Your proposal to further leverage these funds for the purported betterment of housing and infrastructural sectors raises serious questions about fiscal prudence and responsible governance.“Where does the government intend to source the additional N20 trillion it seeks to acquire, especially considering the ambiguity surrounding previous borrowing practices?”
NLC and TUC said the lack of clarity on the matter only fuelled scepticism regarding the feasibility and sustainability of the initiative.According to labour, Nigerian workers rightfully demand assurances that their retirement funds will not fall victim to further federal government borrowing especially when the PENCOM Board had not been constituted as envisaged by the statutes.It stated, “Despite the government’s assurances of widespread consultation with major stakeholders in the pension industry, it is disheartening to note that the NLC and TUC, representing the owners of the entire pension fund contributions, have neither been consulted nor informed about the government’s intentions.“This lack of transparency undermines the sanctity of pension funds, which should be treated with the utmost reverence and protection at all times.”
