The Director General of National Pension Commission (PenCom), Mrs Aisha Dahir-Umar, has debunked reports that the Commission gave a ten trillion naira loan to the Federal Government, labelling the report as misleading.
She also denied the claims that PenCom was owing the Federal Government retirees arrears of pensions, and equally denied reports that Pension Fund Administrators (PFAs) are not fulfilling their obligations to retirees.
In a statement issued yesterday by the Commission and made available to the media, Dahir-Umar, stated that apart from the fact that PenCom is not a bank and does not warehouse or manage pension funds, the Federal Government did not take a loan of N10 trillion from the Commission.
She explained that 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.
“Moreover, pension fund assets are not managed by PenCom. I have said it repeatedly that when we say pension assets have grown to N15 trillion, that does not mean PenCom has N15 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 debts instruments.
Dahiru said the objectives of these moves are safety and fair returns saying 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,” she explained in the statement.
Mrs. Dahir-Umar noted that it is an international best practice to invest in investible instruments issued or backed by the sovereign authority and that the FGN securities meet the objectives of safety and fair returns.
“The FGN has consistently met its repayment obligations, both principal amount and accrued interest, 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.
The PenCom DG further said the delayed payment of retirement benefits to some Federal Government retirees and deceased employees was 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 said payment of the accrued rights was subject to release of funds by the Federal Government and therefore 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”. She said.
She noted that all those enrolled under the CPS have been receiving their benefits through their PFAs and there is no unsolved complaint before the Commission.