If the recent news about the collaboration of National Pension Commission, with Economic and Financial Crimes Commission, EFCC, in a bid to compile and prosecute list of employers who have not been remitting deducted pension contributions, then there is no doubt the pension commission is ready galvanize the resources accruable in the Pension fund for profitable investment.
According to the agency, the move is to arrest the growing cases of unremitted pension fund describing non-remittance as an economic crime. The Director General of Pencom, Ms. Chinelo Anohu-Amazu said, “We receive calls from individuals showing proof of deductions from their salaries and when they look at statements from their Pension Fund Administrators, PFAs, it does not tally. This in itself the beauty of the contributory pension scheme because you can check while you are still working than when you are already retired. According to her, there are a lot of efforts being made and we are in control of the data and verification of those who are not remitting what they have deducted from the salaries of the workers.
“Those who have their account opened and not funding those accounts or those who do not have RSA, I think we have engaged a lot of recovery agents and the issue is that when we find out, you are not only liable for what you have not remitted, you’re also liable for any interest that may have accrued to that amount. “So, this is what is done plus all the attendant liabilities. It is work in progress and we see it reducing as we go ahead, but we are also not in belief that there will be a total obliteration because the human mind is designed always to do things they think they can get away with”, she explained.
Despite the minor setback due to non-remittance at some quarters, the Director General of the National Pension Commission (PenCom), Ms. Chinelo Anohu-Amazu, recently revealed that the total pension assets had hit N5.8 trillion. Mrs Chinelo also recently admitted that the 2014 Pension Reform Act, as reviewed provided opportunities for increased investment of pension funds in infrastructure and housing development. The act also allowed for a percentage of contributing workers’ Retirement Savings Accounts (RSA) balance to be used as equity contribution for mortgage.
During a paper presentation at a Mandatory Continuous Professional Development Programme of the Nigerian Institution of Estate Surveyors and Valuers, the DG explained that there was an effort by PenCom to increase pension investment in infrastructure and housing, and consequently urged stakeholders in pension administration to utilise the provisions of the Act for the provision of more infrastructure and real estate development in the country. Pension Funds Administrators in Nigeria have also backed the use of pension funds for infrastructural development saying pension funds can stand as a veritable source of long term funding and can be made available for economic development.
During a presentation to the House Committee on Pensions in May, Pencom decried that out of the N1.16tn pension fund assets available for investment in infrastructure, only N1.36bn had so far been invested in infrastructure bonds. This, according to the commission, leaves about N1.159tn idle and unable to be invested in the provision of critical infrastructural projects.
There are several sectors in the Nigerian economy calling for immediate attention. One of such areas is the housing sector which is said to be at 17million deficit for a long time even though stakeholders in the sector argued that it’s far more than that. The Chairman, Association of Estate Agents in Nigeria, Mr. Chudi Ubosi, lamented that the demand for housing is at 10:1 for demands and supply and about N59 trillion would be required to bridge the gap in housing. He said the sector contributes about 1.3 per cent to the nation’s Gross Domestic Product (GDP).
He argued that all limiting laws and regulations preventing deployment of pension funds as well as direct investments in housing infrastructure be repealed without further delay. According to Mr Ubosi, “Nigeria is one of the few countries in the world with no mortgage. Funds may just be in the banks; there is the need to create financial products and mortgage backed securities,” he said, adding that the investment in housing should also focus on the lower end of the housing pyramid, while regulations should be amended to allow the PFAs put money in the Fund to enable them invest in housing”.
In this vein, PenCom is currently finalizing a review of the investment regulations so as to ensure a sustainable deployment of pension funds for infrastructure developments. The untapped potential for pension fund investment instruments that will unlock the diversification of the Nigerian economy is over N3trillion.
As part of efforts to achieve this laudable objective, the Commission is already engaging critical stakeholders both in the public and private sectors, especially the Ministry of Works, Power and Housing to build a synergy towards developing the Nigerian infrastructure as a veritable step towards economic diversification.
While the Federal Government budget which has been beclouded by the current padding saga offers limited funds for infrastructure development due to competing demands, the long-term financing market was also underdeveloped, shallow and offered limited capital for deployment to develop infrastructure, pension funds will go a long way in addressing the nation’s infrastructural deficit which currently stands at N23trillion.
The Minister of Power Works and Housing Babatunde Fashola earlier this year also advocated for pension funds to be used to finance infrastructure development in the country.
The Minister at the Nigerian Pension Industry Strategy Implementation Road Map Retreat organised by the National Pension Commission (PenCom) advocated proper use of pension fund to build the required infrastructures for a rapid development for the country.
Similarly, the Minister of Finance, Kemi Adeosun, said the federal government is being cautious as it plans to invest the over six trillion Naira pension funds. According to her, “A lot has been said about the pension money. We have six trillion and people treat it as if it’s just available for the taking. This is people’s future savings, so we have to be very cautious about how we release pension money into investment. “The first thing we have to do is to relax the rules cautiously and with many safeguards so we don’t lose pensioners’ money and cause a problem in the future. “Definitely we are going to put things in place such as the infrastructure bond that we are releasing that will encourage pension funds to invest but invest safely,” she said.
As expected, the leadership of Nigerian workers has been skeptical on this recent agitation as they see it as threat to the future of Nigeria workers. According to the factional president of Nigeria Labour Congress (NLC) Mr. Joe Ajaero “all over the world, pension fund is treated with care and steps are taken by stakeholders, especially the state to ensure the continuous integrity and protection of the fund. It is shielded from the vagaries of the market and the political arena. “Nigeria Labour Congress, NLC, under our leadership views with utmost anxiety the proposal by the Minister of Power, Works and Housing, that the Pension Fund be used for infrastructural development”.
In an apparent bid to allay the fears of NLC, Pencom DG has emphasized that the safety of any investments would not be compromised, as they would require guarantees from government and stakeholders.