The Federal Government’s assertion that it will respect the Pension Reform Act 2024 while seeking funding for its infrastructure projects has not quelled the public outcry.
Stakeholders remain deeply concerned about reports that the government intends to use the N19.66 trillion pension savings for infrastructure.
Harnessing Domestic Funds for Infrastructure Development
Finance Minister and Economy Coordinator, Wale Edun, announced at a Federal Executive Council meeting that the government is preparing a strategy to utilize domestic funds, including the pension fund, for infrastructure development. The plan involves using local resources, including the country’s N19.66 trillion pension fund, to finance infrastructure projects nationwide.
Edun explained that the government’s decision to invest pension and life insurance funds, along with other domestic funds, in sectors such as housing, power, rail, roads, water transport, and technology, aims to boost Nigeria’s economic growth, create jobs, and alleviate poverty. He emphasized that these sectors are key drivers of economic growth and productivity, leading to job creation and poverty reduction.
Stakeholders Denounce the Government’s Proposal
The announcement was met with immediate backlash, with former Vice President and PDP presidential candidate Atiku Abubakar labeling the move as fraudulent. Abubakar urged the government to adhere strictly to the Pension Reform Act and the regulations set by the National Pension Commission, highlighting that pension funds can only invest up to 5% of their total assets in infrastructure. He warned that tampering with pension savings could have disastrous consequences for retirees who depend on these funds.
Government Assures Compliance with Pension Regulations
In response to the criticism, Minister Edun clarified that the government does not intend to violate pension regulations or put workers’ savings at risk. He reiterated that any use of pension funds would be within legal limits and aimed at securing long-term investments that benefit economic growth without compromising the safety of the funds. Edun emphasized that the government’s approach involves collaboration with financial industry experts to ensure the prudent and effective use of pension savings.
Expert Opinions and Labour Union Concerns
Professor Segun Ajibola of Babcock University stressed that the pension fund is a trust that must be protected by its trustees. The Nigeria Labour Congress and the Trade Union Congress echoed these sentiments, warning the government against any attempts to borrow from pension funds. They pointed out that previous government borrowing practices lacked transparency and accountability, raising concerns about the future security of workers’ savings.
Labour Unions Demand Government to Refrain from Pension Fund Usage
Labour unions, including the NLC and TUC, have voiced strong opposition to the government’s proposal. They argued that the pension funds are meant to secure the retirement of workers and not to finance government projects. The unions warned of potential unrest if the government proceeds with the plan and urged the exploration of alternative financing methods that do not jeopardize workers’ savings.
