Chris Uba
The Nigeria Employer’s Consultative Association (NECA) has stated its position regarding the controversy surrounding the move by state governments to borrow from the Pension Fund Assets
(PFAs) for infrastructure development, calling for adherence to the provisions of the Pension Reforms Act.The Nigeria Governors’ Forum (NGF) was reportedly planning to borrow the sum of N17 trillion from the pension fund for infrastructural development.
Reacting to the controversies trailing
the plan, the Director General of NECA, Timothy Olawale, who spoke in
Lagos, said, “the issue of investment and borrowing from the Pension
Fund Asset has remained contentious and vexatious to many stakeholders.”
Olawale, said while it is obvious that the nation needs huge investment
to address current infrastructure deficit, the contention remains how to
fund the deficit.
According to him, “while sections 85-91 of the Pension Reform Act 2014 stipulated the classes of assets that pension funds should be invested in, with over-ridding provisions for the funds’ safety, past and present alleged misapplication of loans by government has created deep mistrust in the minds of citizens and eroded the confidence in government.”
While shedding more light on the provisions of the Pension Reform Act, 2014, the NECA Director General noted that, “we are not unaware that part of the water tight investment regulations issued by PenCom to Pension Fund Administrators stipulated that investment of pension assets for infrastructure development must among others be through infrastructure bonds and up to a maximum of 15 per cent and 5 per cent of assets under management respectively, have risk management and investment committees of the board to instill high level of governance and ensure that all investments are as stipulated in the Pension Reform Act and meet the quality requirements enshrined in the regulations.”
Olawale further noted that, “from the foregoing, it is clear that given the valuation of the pension assets as at October 2020 (which is N12.05 trillion), up to the sum of N2.4 trillion is the maximum that could be invested by the PFAs in infrastructure funds and bonds and not N17trillion as being speculated.”
He added: “Even then, this is not given
or automatic, considering the non-availability of eligible instruments
(funds and bonds) in the financial market to invest the pension assets
for infrastructure development”
Responding to the imperative of balancing safety and reducing national
infrastructural deficit, Olawale affirmed that, “we have no reason to
believe that the relevant extant laws: PRA 2004 and 2014 and the
Investment Regulations won’t be adhered to by the PFAs and PENCOM, the
Regulatory Body.
“As long as any decision to invest part
of the Pension Fund Assets is strictly based on the provisions of the
PRA 2014 and existing Regulations of Investment, which guarantees
safety, transparency, fair valuation and thus removing all ambiguity,
there won’t be any need for concern, at all.”
He said employers’ of labour in Nigeria has implicit confidence in the
PenCom, especially now that the confidence of contributors and
stakeholders has been reinforced with the setting up and inauguration of
the Governing Board for oversight responsibilities.”
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