Recession: Should FG Borrow From Pension Fund? | Punch
If the current All Progressives Congress regime is thinking in the direction of borrowing from the pension fund for capital expenditure, not recurrent expenditure, it would be one of the wisest decisions in bridging the huge infrastructure funding gap in the country.
Pension fund is one of the veritable cheap sources of long-term investment portfolios for funding infrastructural development as it is being done in other climes, especially in the developing and the developed countries of the world. Why would Nigeria be an exception in accessing this humongous idle fund for infrastructural development? There must, however, be institutional and regulatory frameworks in place to fashion out the modalities of borrowing and utilising the fund in enhancing both social and economic infrastructure, technically referred to as “hard” and “soft” infrastructure in Development Finance. Disbursement and utilisation of the proposed “Pension Fund Loan” should be channelled towards enhancing critical and viable infrastructural projects that would boost the socio-economic well-being of the Nigerian populace. These projects include roads, electricity, health facilities, education, food security, potable water, security of life and properties, etc. •Julius Alase (Expert, Development Finance)
The new pension scheme established in 2004 by the Olusegun Obasanjo administration was a great one aimed at alleviating the problems encountered by retirees in their old age. Retirees are usually subjected to hardship, lack, and pain because they do not have some basic things to keep them going.
The plan of the government to borrow from this fund which is now run under a better and well-structured scheme known as PENCOM is possible as it is practiced in other developed nations of the world if only there is a guarantee of a mechanism to secure the fund. If this is not ensured, then the contributors, especially the retirees might face the same pains as experienced during the old pension scheme. •Grace Sopeju (A retiree)
What plans do they have and how do they intend to get Nigerians out of recession is the question. The pension fund serves a particular purpose. In my opinion, if the cost of using the pension fund would be greater than the benefits, then it would be advisable to use another source of income. Especially, if it puts retirees at the risk of not accessing their pension when due; it’s like solving a problem but creating double trouble. •Onyinye Etoniru (Organisational design and development consultant)
I share, to a great extent, the opinions of former President Oluseegun Obasanjo at the recent pension reforms event, where he opined that extra care should be accorded the management of the pension fund. Of course, there would be temptations to spend the fund in order to execute various projects by the government, but the FG should try not to tamper with the fund.
And I will like to add, in a country like ours, where government, on various occasions, has failed to honour its promise to the people; in a society like ours, where the fate of the people keeps depreciating by the day due to insincerity on the part of government since independence, Nigerians would, to some extent, resist any attempt by the government to look the way of the pension fund as a way out of the economic recession. I will advise that the FG should think of other means like selling our national assets that have been underutilised. •Bonario Nnags (Human resource manager)
I have no problem with borrowing from the fund as long as it is spent on infrastructure that would bring development, especially economic development. There is no point keeping money that would bring lower interest rate to the working class. If the government borrows from it and it is used for economic development, it would bring not only profit to the workers but also have spiral effects on the economy of individual person(s) and guarantee more value to the money kept. In fact, it is in the interest of workers and the nation if such money is used especially by this administration that has a reputation for zero tolerance for corruption. God forbids, if the value of the fund kept is $1 to N500, 000; of what use will that become to the working class and our nation? It is in this country that someone took away N10bn from that fund and our judiciary simply asked him to go and sin no more after paying N700,000. Was that in the interest of workers and our nation? •Ayodele Adewale (A former Chairman, Amuwo Odofin Local Government Area)
I think government should not take from the pension fund in view of the basis for setting up the contributory pension fund. Although the Pension Law gives room for the use of the fund in secure investments to generate interests for the owners, of what use would the government put this fund? What would be the fate of the owners of the fund if the intervention fails or gets derailed as usual? Government should find other ways. •Oladiran Ajetunmobi (A civil servant)
I feel there is nothing wrong in the Federal Government borrowing from the pension fund to revitalise the economy, since the pension fund is a long-term fund and lending the FG will not be a bad idea.
However, my fear is that our leaders are corrupt and they have failed us many times. Our trust in them is very minimal, we hope they would repay the debt, so that Nigerians who have laboured hard could get their benefits after retirement. •Adeola Sodamola (An executive assistant, Egbin Power Plant)
Using the pension fund in this time of recession is not appropriate. It means the meagre money the pensioners get would either be reduced or may not be available. Borrowing from the fund would mean that pensioners are stripped of their entitlements. They would be stripped of what they spent the most productive years of their lives to earn. It’s like robbing Peter to pay Paul and another big problem is going to be created. The pensioners should not be made to suffer for the nation’s misfortune. The country’s resources have been mismanaged and wasted. Those involved should be punished. Let us slash our senators and ministers’ salaries and curtail their excesses. After all, leaders are supposed to lead by example. The truth is that there are better and more appropriate ways of solving this recession problem. The government needs to think straight and possibly get advice. What guarantee do we have that the pension fund is sufficient to get the country out of recession? Can we trust our leaders to use the pension fund for the stated purpose without diverting it to their pockets? •Peace Adebiyi (A medical practitioner)
The plan for getting Nigeria out of recession has to be clearly mapped out and convincing. Most importantly, it has to be feasible.
You won’t want to use pensioners’ fund for trial-and-error economic policies. The repayment for the fund has to be well structured.
In summary, the proposed investments for the fund have to be convincingly viable. And the repayment plan has to be highly guaranteed and well structured. There should be no room for default. And there should be close monitoring, regular reporting and a high level of transparency in the investments. •Israel Ekiko, (An internal auditor)
It is a wrong move and I don’t support it. What is the government doing with the money it recovered from looters? What happened to the businessmen in Nigeria who can lend the government huge sums of money? Now, if those options are not good enough, is it the sweat of poor Nigerians that the government should take from? It is wrong and should be resisted by all Nigerians. •Semiu Ajala (A teacher)
(Compiled by Samson Folarin)