The current move by the Nigeria Governors’ Forum (NGF) to borrow N17 trillion from the accumulated pension funds has been rejected by Nigeria Union of Pensioners. According to the union, the government has no authority over the pension funds and therefore should leave the funds alone. The governors had planned to borrow the said amount to fund infrastructure development as well as augment proceeds from the Federation Accounts Allocation Committee (FAAC) and their Internally Generated Revenue (IGR).
We oppose the attempt by the governors to borrow from the pension funds. The move by the governors is contrary to the provisions of the Constitution, the Pension Reform Act, and the international anti-corruption and human rights obligations, which Nigeria signed. Should anything untoward happen to the funds, millions of Nigerian pensioners and their families risk being in perpetual hardship. Over the years, most state governors have not shown good faith in managing borrowed funds and there is no assurance that the funds they want to borrow will be prudently managed.
A few years ago, the Governors’ Forum literally forced former President Goodluck Jonathan to disburse accumulated Excess Crude Account funds. Also, the bailout funds given to them by the present administration of President Muhammadu Buhari are yet to be repaid, as agreed. At present, many pensioners in most states across the country have not been paid their pensions and gratuities by their state governments. In fact, the issue of non-payment of pensions and gratuities has lingered for years in many states despite endless protests and pleas by the various state branches of the pensioners unions. To tamper with the pension funds as being envisaged by the state governors will worsen the plight of the pensioners.
The governors had at the end of its 22nd telecom defence meeting resolved to borrow from the pension funds as well as borrow N2trillion from the NSIA at nine per cent interest under the Contributory Pension scheme for infrastructural development.
Not only is the plan to borrow N17trillion from the pension funds negates the provisions of the extant Pension Reform Act 2014, the amount available in the pension funds is less than the proposed loan. According to the last Quarterly report from the Pension Commission (PenCom), as at September 30, 2020, the fund stood at N11.56trillion. This comprised N8trillion of the Retirement Savings Account (RSA), Active Funds, N934.19billion of the RSA, N1.44trillion of the Closed Pension Fund (CPFA) and N1.19trillion for the approved existing scheme funds. Of the N11.56trillion, N7.5trillion is reported to have been invested in the Federal Government securities.
Although the Federal Government had borrowed from the pension funds before to buy bonds, the law does not allow state governors under whatever platform to tamper with workers’ pension funds. The Pension Reform Act 2014 regulates how the funds can be used. It does not provide for direct borrowing as being sought by the state governors. The Act only provides for the investment of pension funds in viable investment options that will in turn promote the economic development of the country. On paper, infrastructural facilities appear to fall into the category of viable investment option, Pension Funds Administrators (PFAs) are not allowed by law to invest in such ventures if the conditions stipulated in the Pension Reform Act are not met. It must be in line with the investment guidelines of the National Pension Commission.
Allowing state governors to borrow money from the pension funds is unconstitutional. It is also against the Pension Reform Act, and Nigeria’s international obligations. Apart from being risky, it will not ensure transparency and accountability in the management of pension funds.
Therefore, to safeguard such funds as provided by the Act, Pension Administrators should not shirk their duties. They should conduct several risk analyses to decide if investing in any venture meets expected yields and risk involved. Unfortunately, many state governments are not compliant with the Contributory Pension scheme. Therefore, they should not be allowed to borrow from the pension funds. Their borrowing the funds will worsen the living conditions of pensioners in the country. We urge all stakeholders, especially the presidency, the Nigeria Labour Congress (NLC) and civil society groups to wade into the matter and stop the governors from accessing the pension funds.