PenCom speaks on alleged N10trn borrowing by FG, says report misleading
Following reports that the National Pension Commission (PenCom) gave a N10 trillion loan to the federal government, the director general, Mrs Aisha Dahir-Umar says report is totally misleading’.
According to her, the National Pension Commission (PenCom) is neither a lender nor a custodian of funds.
Dahir-Umar who disclosed this in an interview with journalists at the weekend dismissed claims that PenCom was owing federal government retirees as well as insinuations that Pension Fund Administrators (PFAs) have not been meeting their obligations to holders of retirement savings accounts (RSAs).
The DG while explaining how it works said investments by the PFAs in the securities of the Federal Government of Nigeria (FGN) are not loans as erroneously portrayed, but investments in securities, through bonds and treasury bills, as approved by the relevant government agencies.
in this case, she said the Debt Management Office (DMO) and Securities and Exchange Commission (SEC) are traded on authorized capital markets. “That is, the Nigerian Exchange Limited and FMDQ OTC Securities Exchange,” she said.
She further explained that moreover, pension fund assets are not managed by PenCom. “I have said it repeatedly that when we say pension assets have grown to N19.6 trillion, that does not mean PenCom has N19.6 trillion locked somewhere in its office or bank accounts. Pension fund assets are managed by the licensed PFAs and held in custody by the licensed Pension Fund Custodians (PFCs).
“The PFAs are responsible for investing pension fund assets in allowable asset classes, including FGN (Federal Government of Nigeria) debts instruments. The objectives are safety and fair returns. All these are in line with the provisions of the enabling law, the Pension Reform Act 2014, and the rules issued by the Commission.
“It is obvious from the above that what is referred to ‘loan to FGN’ is just investment in FGN securities by the PFAs, as is done by other institutional investors such as banks, insurance companies, asset managers, etc.”
It is an international best practice to invest in investible instruments issued or backed by the sovereign authority, she said, and that the FGN securities meet the objectives of safety and fair returns.
“The FGN has consistently met its repayment obligations, both the principal amount and accrued interests, for all investments in bonds and T-bills to all investors including pension funds. The information is always in the open and accessible on our website, www.pencom.gov.ng,” she said.
Cable report that on the outstanding benefits to federal government retirees and deceased employees, Dahir-Umar said it is because of “the inadequate and delayed funding for the payment of Accrued Pension Rights for those who were in service before the Contributory Pension Scheme (CPS) was introduced when PenCom was established in 2004.”
She added: “Payment of the accrued rights is subject to release of funds by the Federal Government. So, it is beyond the powers of the Commission. However, we have been engaging the Federal Ministry of Finance for more funds to be released to settle these liabilities, but it is not a secret that the government itself has budgetary constraints.”
All those enrolled under the CPS have been receiving their benefits through their PFAs and there is no unsolved complaint before the commission, she maintained.