Federal Government has secured the sum of N5 trillion from the pension funds to fix its infrastructural deficits and fulfill other financial obligations.
The amount was taken from the N7.3 trillion pension funds saved since the commencement of the Contributory Pension Scheme (CPS) in 2004, Leadership reports.
According to findings, the N5 trillion was used to build new roads, repair the rail system, fix some of the power challenges, pay salaries of its workforce, among others.
Reports showed that the Pension Fund Administrators (PFAs) invested N3.87 trillion, amounting to 54 percent of the pension funds, in federal government bonds, while the pension operators also invested N1.27 trillion, representing 17.7 percent of the pension funds in government treasury bills in a bid to rescue the federal government from illiquidity.
This means the pension industry has granted 71 percent of the pension assets as loans to the federal government through bonds and treasury bills.
Since federal government bonds and treasury bills are less risky, the pension operators decided to invest heavily in them, while the new scheme has generated about N2.5 trillion as investment income from some of the investments PFAs made.
Speaking on this development, Chairman of Pension Funds Operators of Nigeria (PenOp), Mr Eguarekhide Longe said, “With about N5 trillion invested in infrastructural development through bonds, it shows you that the pension fund has been active. So, the philosophy of managing this money is to add to it. It means that the money has been used profitably”.
He expressed dismay over the comments made by some lawmakers and government officials that the pension fund is lying idle, noting that most of the fund still resides with government.
He disclosed that, while the pension fund operators are ready to invest more of the fund in infrastructure, the federal government must come out with infrastructure bond, which it is yet to do.
“We are ready to invest in infrastructural bonds whenever the government decides to float them to finance key developmental projects”, Mr Longe added.
Promising that the pension fund managers are ready to engage with government to expand the economic space, though it is not their primary objective, he added that care must be taken not to invest pension fund in a project that will not regenerate it.
“If you put pension fund in a project that does not regenerate it, the money is gone and in many cases as we have found, the project has not been delivered because it was not properly conceived”, Mr Longe noted.
He said the managers had requested the investment banking community to come out with products that abide by the investment guidelines in the Pension Act, which operators can finance.
