The total of N5.14trillion was loaned to federal government from the N7.3 trillion pension funds saved since the commencement of the Contributory Pension Scheme (CPS) in 2004.
According to the source, the said N5.14trillion was loaned to the government through bonds and treasury bills purchase by the pension fund managers which proceed were meant to fix its undisclosed infrastructural deficits and meet its financial obligations as and when due.
Furthermore, the said loan money has allowed the government to build undisclosed new roads, repair the rail system, fix some of the power challenges, pay salaries of its workforce, among others; it has also in return lead to economic growth and development.
Of N5.14trillion borrowed, the Pension Fund Administrators (PFAs) invested N3.87 trillion, amounting to 54 per cent of the pension funds, in federal government bonds, while the pension operators also invested N1.27 trillion, representing 17.7 per cent of the pension funds in government treasury bills in a bid to rescue the federal government from illiquidity.
This means the pension industry has granted N5.14trillion representing 71 per cent of the pension assets as loans to the federal government through bonds and treasury bills leaving a total of N2.16trillion of the fund in active.
Since federal government bonds and treasury bills are less risky, the pension operators decided to invest heavily in them, while the new scheme has generated about N2.5 trillion as investment income from some of the investments PFAs made.
Eguarekhide Longe, the chairman, Pension Funds Operators of Nigeria (PenOp), speaking on the development further, he said “With about N5.14 trillion invested in infrastructural development through bonds, it shows you that the pension fund has been active. So, the philosophy of managing this money is to add to it. It means that the money has been used profitably”.
Longe articulated dismay over the comments made by some lawmakers and government officials that the pension fund is lying idle, noting that most of the fund still resides with government.
He disclosed that, while the pension fund operators are ready to invest more of the fund in infrastructure, the federal government must come out with infrastructure bond, which it is yet to do.
“We are ready to invest in infrastructural bonds whenever the government decides to float them to finance key developmental projects”, The Chairman added.
Promising that the pension fund managers are ready to engage with government to expand the economic space, though it is not their primary objective, he added that care must be taken not to invest pension fund in a project that will not regenerate it.
“If you put pension fund in a project that does not regenerate it, the money is gone and in many cases as we have found, the project has not been delivered because it was not properly conceived”, he noted.
The government should create the ideal business environment for investment in regeneration projects that covers commercial, industrial, leisure, residential, retail, visual studio, mixed use, etc across the country.
He said the managers had requested the investment banking community to come out with products that abide by the investment guidelines in the Pension Act, which operators can finance.
Longe continued: “The fact is that there are ample provisions in the investment guidelines that allow for investment in projects, so to say, infrastructure, private equities and real estates, bonds, among others.
“But what has happened is not that the money is idle in the PFAs or that the fund managers have not looked for those projects. It is not their jobs to go and create projects, but we have actively sorted the investment banking community to develop products that we can invest in”.
Meanwhile, the former Chairman of PenOp, Dave Udeanu, took another angle as he urges the government to come up with viable projects that are backed up with adequate guarantee of the return of the fund borrowed, stressing that most states have already invested part of the pension funds in infrastructure.