Addressing the journalists Monday in Abuja during the National Administrative Council, NLC President, Ayuba Wabba, reminded the Federal Government that the pension reform act 2014 provides only for investment not borrow.
While noting that the contributory pension scheme is being fully funded by workers and employers and privately managed by Pension Fund Administrators (PFAs), Wabba reiterated that the guidelines on investing pension funds has the primary objective of adequate return on investment and the safety of the fund.
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“We strongly advise Federal Government to shelve its plan and not to do anything that will undermine the integrity of the pension scheme. We will continue to watch over the safety of the funds to protect the interest of workers and pensioners.
Recall that recently, the National Economic Council gave the nod to the Federal Government to borrow 2 trillion from the pension funds presently put at 10 trillion to finance the development of national infrastructure.
“Government need to be reminded, that the contributory pension scheme which come into being in 2004 is fully funded by workers and employers and it’s privately managed by Pension Fund Administrators (PFAs). The funds are in the individual Retirement Savings Account (RSA) of beneficiaries.
“The main objective of the scheme is to ensure that after retirement every worker in public or private sector who had contributed to the scheme receives his/her retirement benefits as at when due.
“It is important to stress that the 10 trillion-naira pension fund is not warehoused in pension commission which is the regulator, the Central Bank of Nigeria, the Pension Fund Administrator or the pension fund custodian. The fund is warehoused in the private individual Retirement Savings Accounts of contributors, who are workers and beneficiaries.
“The guidelines on investing pension funds which had the input of organized labour, pension union has the primary objective of adequate return on investment and the safety of the fund. The pension fund administrators are investing for maximum return on investment for the benefit of the beneficiary and not borrowing.
“The pension reform act 2014 provide for investment not borrow. The Pension Fund Administrators are to invest based on their risk and reward appetite; but usually in minimal risk entities. They are not to be coerced or cajoled to invest because it is criminal to do so.” Said Wabba
While noting that Labour being a critical stakeholder as provided in the act were not consulted, the NLC President strongly warned that it was a clear violation of the provision of the Pension Act, that 5 years down the line, the board of PENCOM statutorily saddled with taking or approving decisions as weighty as this has not been constituted.
Furthermore, he expressed concerned that at a time government should be considering paying up its indebtedness to pensions that is in in excess of N400 billion, it was rather nursing plans.
“Our concern is further deepened by the fact that at the moment, government’s indebtedness to pensions in accrued rights, pension differentials, minimum pension guaranty, pension increase, etc., are in excess of N400 billion. Government has to be inclined to pay up this debt.
“The claim that direct borrowing is consistent with practices in Chile is patently false. In Chile government accesses pensions funds through the money market and all such investments are guaranteed by Government to cover for the principal and return on investment.” Wabba said
