Reactions trail Fashola’s call for pension fund diversification

Reactions have continued to trail the recent call by the Minister of Power, Works and Housing, Babatunde  Raji Fashola, for the diversification of  the  economy using pension funds and private capital. Fashola had posited that the pool of pension fund which has exceeded N5 trillion is a veritable source of capital lacking suitable investable vehicles, […]

Reactions have continued to trail the recent call by the Minister of Power, Works and Housing, Babatunde  Raji Fashola, for the diversification of  the  economy using pension funds and private capital.
Fashola had posited that the pool of pension fund which has exceeded N5 trillion is a veritable source of capital lacking suitable investable vehicles, adding that though the fund contains the contributions of the working class, it is yet to be diversified into adding value to the lives of the contributors.
He therefore advocated the investment of pension funds for positive real returns, bankable products with low risk profile and sufficient comfort so that whatever is used is returned while making visible impact on the nation’s economy and contributors living standards.
The minister also noted that pension funds in Africa are  growing as well as the number of contributors but the  impact on  human life in the continent is yet  to be commensurable to  the globally acceptable standard.
This, he attributed to the fact,  that the funds are invested in government equities and bonds as is the case in Nigeria.
He said that many African countries are preoccupied with running after multilateral agencies looking for aid or loans, with pension funds in Africa running to   $310 billion awaiting  to be utilised.
Fashola noted that the pension fund can be invested to diversify the nation’s economy. Said the funds can be used for roads, power plants, housing, refineries, petrochemicals, steel production, sea ports, hospitals, school hostels, prisons among others.
 The minister implored the private and foreign investors to review their investment strategies and join hands with the pension administrators and invest in infrastructure development as a way of diversifying and growing the Nigerian  economy.
An economist, Ahmed Ademosun, however faulted    Fashola`s call for pension funds diversification, arguing that a pension is the sacred agreement that maintains the trust between a nation and its diligent retiree population.
He said that, if after putting in the statutory 35 years into public service, a civil servant encounters difficulty in pension retrieval, as is rife across the nation, a crucial social contract between the state and its citizen is infringed upon, with the grave consequence of a poorer adult population.
“For its possible negative result of human hardship when mismanaged, pensions should be the last resort pot to be raided to fund infrastructural development,” he told Daily Trust.
He said, although the minister’s call is a sensible one,  in the face of dwindling revenues accruing to the government at all levels, but strong mechanisms must be put in place first before the hard-earned  citizens’ pension funds are contemplated as diversification aid.
“An idle pension pot presents a springboard for projects implementation if strict legislative mechanisms are enforced as safeguards. Whatever is taken must be guaranteed returned.
“Loopholes that allow for public servants to divert people’s earnings as recently witnessed in the ongoing N32 billion scam involving government officials in the Pension Reform Task Team (PRTT), must be closed first. Also, the Single Treasury Account (TSA) is not enough as guarantee against mismanagement. A reform of project stakeholders’ engagement and Service Level Agreements (SLAs) must first take place to ensure that borrowed funds are tied to stipulated projects with commensurate returns forecast,” he said.
 “A growing loot recovery portfolio underpinned by the present administration’s anti-corruption stance also present funds that could be tapped into, if not now, definitely in the long run. Creating a central account where loot recovered is pooled, to be drawn from for economic diversification purpose is another option that could be prioritised; the judiciary can help by expediting the numerous corruption cases before it,” said  Ademosun.
The Nigeria Labour Congress (NLC), President Ayuba Wabba, told Daily Trust that Nigerian workers would not allow the proposal of the minister to stand until there is an iron clad guarantee that the money will be justifiably utilised for the benefits of the masses.
He said: “Pension money is not free money, it’s workers money. And anything outside the decision of the workers cannot stand. First is that, all over the world it’s possible to invest pension funds but not like we are having in Nigeria.  We will not allow a situation where the funds will be invested without knowing how they will come out because by the time the workers will need this money that is when the money will not be available.
“I want to state clearly also that that money had been over-borrowed, many government agencies through bonds had actually over borrowed that money. So, we must look at the difference before we agree on such things because it is not free money; money that belongs to workers for a specific reason.  We also know that pension administration in Nigeria had been actually undermined for a very long time. The corruption in the process had also been there so we are not unmindful of all of these and therefore we are not going to agree on that except we are able to look at the difference, whether it will serve the interest of the workers or it’s only meant to serve the interest of the investors. Those are the issues we will look at, but for now, we will resist any attempts to do that behind the workers.”
Also commenting, former General Secretary of the NLC and present Executive Secretary of the Organisation of Trade Unions of West Africa (OTUWA), Comrade John Odah, noted that using the savings in the pension funds for infrastructural development is not a new one.
He said: “There have been examples of the successes of this in a number of Asian economies. The main problems that need to be addressed in our own setting are working out the necessary safeguards to protect the fund from being used by scammers for other purposes upon accessing them. We have had instances in this country where supposedly respected businessmen have diverted aviation intervention fund, tile intervention fund etc.”