The management of N5.32 trillion pension contributions is one issue that has led to a divide between the public and operators of the pension sub-sector, writes Ebere Nwoji

The enactment of the pension Reform Act in 2004 and the reviewed version in 2014, which ushered Nigerian workers and pensioners into the present regime of Contributory Pension Scheme (CPS), is one policy of federal government that has received much commendation from Nigerians.

The policy is also one, out of many government policies that have in recent times been greeted with a lot of questions, agitations and criticism, especially in the area of investment of funds accruing from the scheme.

Indeed, despite the inbuilt checks and balances into the pension scheme, which obviously makes it pretty difficult for any of the bodies associated with the collection and investment of the fund to tamper with it, many Nigerians have been expressing worries about the safety or not of the funds.

Aside the fear of possible embezzlement of the funds, many are curious and dissatisfied with the investment pattern despite the assurance by not only the National pension Commission (PenCom) , the regulatory body for the pension sub sector but also the Pension Fund Managers (PFAs) and Pension Fund Custodians (PFCs).

By the design of the CPS, the contributed funds are paid into the Retirement Savings Accounts (RSA) of contributors, who registered with any of the licenced pension fund managers. The PFCs invest the funds in line with investment guidelines issued by PenCom.

According to PenCom, by the dictates of the Act that established the scheme, among these managers, no one has the right or access to the money not even PenCom and none of them can arbitrarily take decision on where the fund should be invested or not irrespective of the need for change of such decision.

But despite these securities, the Nigerian public still doubts the safety of the funds and profitability of the various portfolios into which the funds were invested.

Some Nigerians, including the educated ones and members of Nigerian business community, strongly believe that the N5.32 trillion funds that have accrued from the scheme is idle in a bank account while the need for investment of such funds abound.

Some believe it is starched in PenCom’s account while others feared that it is in the account of either the PFAs or PFCs and that in the event of closure of such firms, the accumulated funds will go down the drain.

Wrapped in this kind of thought, many have been agitating for a total disclosure of how these funds are invested while others have called for its investment in a particular portfolio they think will yield profits fast and add value to people’s life.

Some retirees and workers whose retirement is in sight want the fund to be invested in mortgage financing and the law reviewed to enable them own landed properties through investment of their contributions.

But in reply, PenCom management had insisted that the funds are under the control of investment experts, who know better than the contributors and their investment decisions guided by strong regulations.

This kind of thought was what gave rise to continued push for investment of the pension funds in infrastructural development in the past two to three years.

Indeed, government, private investors among others have within this period been on the neck of PenCom for investment of the pension fund in infrastructural development .

They cited example of other countries where pension fund investment in infrastructural development has become the back bone of their economic development insisting that PenCom should ignore the existing laws and approve the use of the funds in infrastructural development

At a point, this dominated discussions in every business gathering by various sectors of the economy including legal practitioners.

The agitation was so much that but for the determination of the PenCom’s Director General Mrs. Chinelo Anohu- Amazu, to do exactly what the law said concerning the funds, the commission would have succumbed to arbitrary diversion, of if not all, greater part of the funds to infrastructural development.

She insisted that investment of the pension funds should be restricted to the portfolios stipulated by the law with the result that today, over 60 percent of the fund was invested in federal government bond while the remaining was invested in other Various portfolios stipulated by the law.
To carry Nigerians along in her stand on investment of the fund only on legally stipulated portfolios and restricting of infrastructural investment of the fund on the actual percentage allowed by the law, Anohu- Amazu resorted to public enlightenment and education through speeches and press interviews on why she should not assign the entire funds to infrastructural development.

Initially, her effort in this regard was greeted with criticism even from government to the extent that former minister for Finance, Mrs. Ngozi Okonjo Iweala almost forced her to yield to the demand, but her pressure in this regard simmered down later and to a reasonable extent, this has reduced pressure from government on the investment if the fund.
But from the public side, the pressure is still on.

At a recent media parley in Lagos, several questions were raised on the investment status of the N5.32 trillion pension fund but Anohu-Amazu stated clearly that no part of the fund is idle in any bank.

She advised investors with good investment ideas, who are interested in the pension funds to study the guidelines on pension funds investment contained in PenCom’s website and ensure their investment ideas meet the criteria stipulated by law before approaching the commission .

She explained that contrary to the clamour that the huge accumulated pension funds are lying idle while the need for its investment abound, there is no single part of the fund that is lying idle anywhere, rather the accrued pension asset put at N5.32 trillion has been legally invested and the investments are regularly and closely monitored.

She explained that every step taken in investment of the money is guided by the law and no body not even government can arbitrarily take decision on the investment of the pension assets without following the due process of the law.

“The contributory pension system is governed by law that is sacrosanct, the law states clearly where the pension fund can go ….neither the pencom nor the PFAs, PFCs or government or anybody can step outside of these parameters it is not an arbitrary decision by PenCom or government wakes up one morning or the PFCs or PFAs this is governed by the law and it is deliberate”, she insisted..

she also explained that no part of the pension fund is in custody of PenCom or Pension Fund Administrators but is strictly with the pension Fund Custodians(PFCs) who in turn has invested the fund and is returning profits.

“It is not with PenCom, PenCom only issues guidelines for the operational working of those laws nothing in the guideline can deviate from the law otherwise it becomes illegal.this is the procedure, sections in the law dealing with investment is very clear on where the pension fund can go and where it cannot go into. The key thing is primarily to pay retirement benefits as and when due.Investors has the first objective to ensure that there is fair return on investment in that money you are saving when you retire,” the PenCom DG sated.

She urged Nigerians insinuating that the funds are starched in one bank to disabuse their minds insisting that all aspects of the fund has been invested.

“when I hear things like the funds are lying idle,it is clear to me that the person does not really understand.There is no money lying anywhere,there is not one kobo of the pension fund that is lying idle.They are all invested and PenCom ensures that the investment are optimally done there is requirement for daily returns on Investment,” the PenCom Dg explained.

She said the industry’s investment guidelines specified how the funds are to be invested, stressing that some investors do not get funds from the industry because they failed to meet the requirements in the guidelines.
She said the industry is willing to invest in infrastructure and other projects, but the terms and conditions spelt out in the investment guidelines must be strictly adhered to. She maintained that the commission and pension operators would not bend the rules to please anybody.

The PenCom boss urged those agitating for the deployment of pension funds to understand that the funds are held in trust for workers who must definitely get their contributions at retirement, hence all investment are done with the workers in mind.

She called on investors seeking the funds to tailor their proposals in line with the investment guidelines to enable them access them.

Speaking at a recent pension retreat in Abuja, Minister of works and Power Mr. Raji Fashola said in the face of fall in the price of oil, Nigeria’s main source of revenue, a major turnaround in the national economy can be achieved through investment of private monies such as Pension funds in bankable infrastructural projects that will give value to lives of the contributors.

He however said Nigeria needs a change of attitude in its bid to revive the economy through such private money adding that proceeds from such money should not be used like the oil money but must ensure returns on investment.

“The pension funds, which are under the management of pension funds administrators will not go into roads, rail, housing, hospitals or universities unless we change our attitude,” he insisted.

He said with the existing pension assets put at over N5trillion and potential huge pension assets from both public and private sector contributors, Nigeria is still rich.

According to Fashola, what Nigeria needs is to relax some of the stringent laws on investment of pension funds put in place due to the huge fraud committed by managers of old pension.

He cited example of what pension assets is doing in other African countries saying “most prolific of the pension funds in Africa, which is the South African Public Investment Corporation (PIC) has over $150 billion assets under management.”

According to him, here in Nigeria, South Africa has $289 million pension investment in Dangote Cement.

He also said $98 million pension assets of the country has been approved by for Notore Fertilizer, while $230 million is in MTN Nigeria, $270 million in Erin Energy (formerly CAMAC) and $150 million in Mainstream Energy Solutions (in the power sector of Nigeria).

On Nigerian pension-assets, Fashola rhetorically asked, what is the ‘home based’ pension fund doing?

He argued that if the “visiting” pension fund from South Africa has a total of $897million in Nigerian economy, why is Nigeria’s own assets mainly invested in government bond. The minister said the answer is obvious.
Listing some of the investible vehicles where Nigerian pension assets can be invested, Fashola said: “Roads that can be tolled; housing; the 4th Mainland Bridge; the Coastal Road linking several coastal states from Lagos to Bayelsa ; the new seaport in Lekki and Badagry, the refinery by Dangote, Ajaokuta Steel, a petrochemical plant in the Niger Delta; the broken textile mills in the North and South of Nigeria that require new equipment and disciplined fiscal, technical and organisational management; prison in each of the 6 (six) geopolitical zones of Nigeria that can help strengthen our justice system and decongest the colonial prisons we have kept as relics of our own sense of justice; they are in hostels for students in Nigerian universities, embedded power plants in the universities, most of which have teaching hospitals and provide an opportunity to power education and healthcare and the list is endless”, he stated.

He declared: “The time for it is now. This is the biggest opportunity to act towards diversification rather than sloganise about it, this is the time to show that our Nation and our National economy is bigger than the challenges posed by the dwindling oil prices. This is the time to diversify and change the face of our economy once and for all.”

He however noted that the risks that stand in these investments “are caused by Nigerians and they must be changed by Nigerians”.

According to the PenCom DG, already some portion of the pension fund has been invested in infrastructure.

But obviously, this is insignificant but is line with the law.

Apparently, what the agitators like the works and power minister is saying is that greater percent of the fund that is currently in federal government bond should be channelled to infrastructure so that it will yield greater profit and at the same time improve on the standard of living and welfare of the citizenry, who will have access to good roads, power supply and other amenities.

But the PenCom DG is saying that this can only be done if the investment guideline and the law on the fund investment reviewed.

Her fear over investment of the fund in infrastructural development is that Nigerians will mismanage it thinking it is part of their national cake. As such, if it is invested in road construction, they will not want to pay toll gate and one political party may take over power tomorrow and stops toll collection to fulfill its campaign promises. What this means is that the money has gone down the drain.

As the fund continues to grow year after year, especially as PenCom has perfected plans for the micro pension scheme to take off, which is possible to triple the present figure within a short period, people’s interest on the investment of the fund will grow higher and this may generate more controversy.

This has created more responsibility for PenCom to continue to enlighten the public on the need to guard against loss of pension funds so that even in the future, when the law allows greater part of the fund to be invested in infrastructural development, Nigerians, will see such investment as their personal business that must yield returns and guard its abuses so that pension funds will be judiciously utilised.