Economists and securities experts have reacted angrily to the Federal Government’s plan to deduct N20 trillion from pension funds for infrastructure development, saying government has no business with the investment returns of citizens.
The Federal Government, apparently in dire need of cheap funds to finance its huge infrastructure deficit currently put at $3 trillion, had disclosed plans to pull N20 trillion from pension funds to finance infrastructure.
Pension funds appear to be the best source of long-term capital to finance long-term investments like infrastructure development. However, stakeholders have raised concerns about the appropriate utilisation of the fund to deliver world-class infrastructure that would benefit the production sector, attract more investment into the country and translate into financial returns.
The nation’s pension fund assets rose to N19.5 trillion at the end of January 2024, after it ended last year (December 2023) at N18.36 trillion, thereby, showing a N1.17 trillion growth in January, triggered by forex-dominated investment by Closed Pension Fund Administrators (CPFAs) and Existing Schemes, data from the National Pension Commission (PenCom) has shown.
Of the N19.5 trillion, N12.14 trillion was invested in FGN securities of which bonds attracted N11.59 trillion; treasury bills N221.81 billion; agency bonds N14.86 billion; Sukuk bonds N124.89 billion and green bonds N181.57 billion. Over 80 per cent of pension fund assets have been invested in its securities.
They hinged their opposition to the current development on the claim that most assets managed by the government in the past were either grossly abused or misappropriated.
In addition, they noted that the N19.67 trillion pension fund assets have been invested into different portfolios, leaving just N396.30 billion uninvested cash and assets in the kitties of Pension Fund Operators (PFOs).
Professor of Economics at Babcock University, Segun Ajibola, said the pension fund is a trust fund and the trustees of the fund (the governments and their agents) owe a sacred duty of protecting the laws governing the operation of the funds.
According to him, attention should be focused on the states where retired people are subjected to endless waiting and repetitive ‘clearance and verification’ to access their pensions, the value of which is often eroded by galloping inflation.
