Adedapo Adesanya
By Adedapo Adesanya
The National Pension Commission (PenCom) has denied widespread claims that it handed out a N10 trillion loan to the federal government.
The Director General of the pension regulator, Mrs Aisha Dahir-Umar, in an interview over the weekend, said that PenCom is not a bank and does not warehouse or manage pension funds.
As a result of this, the federal government could not have taken a loan of N10 trillion from the commission.
“Investments by the PFAs in the securities of the Federal Government of Nigeria (FGN) are not loans as erroneously portrayed, but investments in securities, through bonds and treasury bills, as approved by the relevant government agencies, in this case the Debt Management Office (DMO) and Securities and Exchange Commission (SEC). They are traded on authorized capital markets. That is, the Nigerian Exchange Limited and FMDQ OTC Securities Exchange,” she stated.
“Moreover, pension fund assets are not managed by PenCom. I have said repeatedly that when we say pension assets have grown to N19.6 trillion, that does not mean PenCom has N19.6 trillion locked somewhere in its office or bank accounts. Pension fund assets are managed by the licensed PFAs and held in custody by the licensed Pension Fund Custodians (PFCs).
“The PFAs are responsible for investing pension fund assets in allowable asset classes, including FGN debt instruments. The objectives are safety and fair returns. All these are in line with the provisions of the enabling law, the Pension Reform Act 2014, and the rules issued by the commission.
“It is obvious from the above that what is referred to as ‘loan to FGN’ is just investment in FGN securities by the PFAs, as is done by other institutional investors such as banks, insurance companies, asset managers, etc.”
Mrs Dahir-Umar added that it is an international best practice to invest in investible instruments issued or backed by the sovereign authority and that the FGN securities meet the objectives of safety and fair returns.
“The FGN has consistently met its repayment obligations, both the principal amount and accrued interests, for all investments in bonds and T-bills to all investors including pension funds. The information is always in the open and accessible on our website, www.pencom.gov.ng,” she said.
She also responded to claims that PenCom was owing federal government retirees arrears of pensions as well as insinuations that Pension Fund Administrators (PFAs) are not fulfilling their obligations to retirees with regard to access to their retirement savings.
“The delayed payment of retirement benefits to some Federal Government retirees and deceased employees is because of the inadequate and delayed funding for the payment of Accrued Pension Rights for those who were in service before the Contributory Pension Scheme (CPS) was introduced when PenCom was established in 2004,” she said.
“Payment of the accrued rights is subject to release of funds by the Federal Government. So, it is beyond the powers of the Commission. However, we have been engaging the Federal Ministry of Finance for more funds to be released to settle these liabilities, but it is not a secret that the government itself has budgetary constraints.”
