The National Pension Commission (PenCom) has refuted allegations that it owed federal government retirees and implied that Pension Fund Administrators (PFAs) had neglected to fulfil their duties to holders of retirement savings accounts (RSAs). PenCom, according to director general Mrs. Aisha Dahir-Umar, is not a lender nor a custodian of funds.
Dahir-Umar stated that it is now vital to address “totally misleading” rumours that the commission loaned the Federal Government N10 trillion in an interview with media in Abuja over the weekend.
“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 the Debt Management Office (DMO) and Securities and Exchange Commission (SEC). They are traded on authorized capital markets. That is, the Nigerian Exchange Limited and FMDQ OTC Securities Exchange.”
“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).
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“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.”
According to her, investing in investible instruments issued or guaranteed by a sovereign body is considered an international best practice. The FGN securities are designed to achieve the dual goals of safety and equitable returns.
“For every investment in bonds and T-bills made by the FGN, all investors, including pension funds, have received prompt payment of the principle amount as well as any accumulated interest. We always keep the information available and accessible on our website, www.pencom.gov.ng,” the spokesperson stated.
Dahir-Umar explained that “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” is the reason for the unpaid benefits owed to federal government retirees and deceased employees.
“Payment of the accrued rights is subject to the Federal Government’s release of funds,” she continued. Therefore, it is outside the Commission’s purview. It is not a secret that the government itself has financial limitations, but we have been requesting more monies to be released to satisfy these responsibilities from the Federal Ministry of Finance.
She insisted that there are no unresolved complaints before the commission and that everyone enrolled under the CPS has been getting benefits through their PFAs.
