- Govt can spend part of pension fund for infrastructural development, but it must provide sufficient guarantee
Former President Olusegun Obasanjo spoke the minds of pension contributors on Tuesday, last week, at the World Pension Summit held in Abuja when he stated emphatically that the beauty of pension is in the ability of the contributors to have access to their money when they retire or when they need it. He was speaking against the backdrop of suggestions that part of the N5.8trn Contributory Pension Scheme assets in the country be loaned to the government to fund infrastructural development and help in getting the economy out of the woods.
The former president is not totally averse to the idea, but is afraid of the ‘Nigerian factor’. Projects and policies that worked elsewhere hardly work in Nigeria. “I like innovation and I like what you are talking about in the next two days – pension innovations and sustainability – but I will add two things. Your innovation must be with caution. When people have to work all the days of their lives that they are strong and they make contributions for their future, we cannot be too adventurous with the so-called innovation because when they need the money, the money must be there.”
Without doubt, this would resonate well with pension contributors. Chief Obasanjo is speaking from a vantage position. As former head of state, he knew what happened to the old pension scheme in the country in the era of the National Provident Fund (NPF) scheme established in 1961, the first legislation to address pension matters of private organisations in Nigeria. The National Social Insurance Trust Fund (NSITF) scheme was later set up by Decree No. 73 of 1993 to replace the defunct NPF scheme with effect from July 1, 1994, to cater for employees in the private sector of the economy. Indeed, Chief Obasanjo’s administration became instrumental to the establishment of the present contribution scheme in 2004 due to the defects in the past efforts. Moreover, the former president also knows what government can do with public funds in Nigeria. But pension fund is not the kind of money to trifle with.
As the Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu, also said on Wednesday at the African Pension Awards, which was organised as part of activities for the World Pension Summit, “given the current global economic challenges occasioned by the drop in commodity prices, the funds generated under viable pension schemes have become veritable sources of financial intermediation. In order to support economic development, it is fundamental that the pension fund is diversified to include investment in identifiable infrastructure, real estate and other key aspects of the real economy”. As a matter of fact, this was part of the campaign by advocates of the new pension scheme.
So, there appears a consensus that the pension fund could be made available to the government to fix infrastructure; the issue however is how to ensure that the pension operators and pensioners would not regret the decision. A major setback of the old scheme was inadequate provision to secure the pension fund. We should not make the same mistake under the new arrangement.
This, indeed, is the crux of the matter. Pension is about trust; it is all about integrity. Therefore, government must provide adequate mechanism to ensure the safety of the funds in order to calm frayed nerves. If government utilises the money wrongly without adequate security, then, the fate of well over seven million contributors would be jeopardised. Therefore, if the government eventually gets the loan from the pension fund, it should invest it, preferably, in government securities. We cannot afford a repeat of a situation where our pensioners pine away at old age because their pension has been tampered with and is therefore no longer available for them when it matters most
