In a strongly-worded statement, former Vice President Atiku Abubakar has expressed deep concern over the Federal Government’s proposal to utilize pension funds for financing critical infrastructure projects across Nigeria.
This reaction follows a disclosure by the Finance Minister and Coordinating Minister of the Economy, Wale Edun, during a briefing with State House correspondents after the Federal Executive Council (FEC) meeting at the Presidential Villa on Tuesday, May 14.
Edun revealed that the government aims to unlock N20 trillion from the nation’s pension funds and other domestic savings to spur economic growth and fund infrastructure development. According to him, while the initiative is expected to eventually attract foreign investment, the immediate focus will be on domestic savings. However, he did not provide specific details regarding the proportion of pension funds to be redirected towards these projects.
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However, Atiku was quick to denounce the move, describing it as a potential disaster for the nation’s pensioners.
“This initiative must be halted immediately!” Atiku declared in a social media post on Wednesday. “It is a misguided plan that could have disastrous consequences for Nigeria’s hardworking men and women who have toiled, saved, and now depend on their pensions after retiring from service.”
The former Vice President highlighted the legal implications of the government’s proposal, pointing out that it contravenes the Pension Reform Act of 2014 (PRA 2014) and the revised Regulation on Investment of Pension Assets issued by the National Pension Commission (PenCom). He stressed that the Federal Government must adhere strictly to these regulations, which stipulate that no more than 5% of total pension fund assets can be invested in infrastructure projects.
“As of December 2023, total pension fund assets stood at approximately N18 trillion, with 75% invested in FGN Securities. There is no free pension fund exceeding 5% of the total value for Mr. Edun to manipulate,” Atiku noted. “This plan represents another attempt to perpetrate illegality by the Federal Government.”
He warned that diverting such substantial amounts from pension funds could undermine the financial security of retirees and erode trust in the pension system.
“The government must not gamble with the livelihoods of retirees,” he stated. “Pension funds are the savings of hardworking Nigerians, and any move to divert these funds without proper oversight and adherence to legal limits is both unethical and dangerous.”
Economists and financial experts have echoed Atiku’s concerns, warning that tapping into pension funds could set a dangerous precedent. This is particularly alarming given the federal government’s current spending priorities. On Wednesday, Vice-President Kashim Shettima announced that President Bola Tinubu’s administration has allocated N90 billion to subsidize the cost of the 2024 Hajj pilgrimage. This decision has further intensified worries about the government’s ability to judiciously manage scarce resources.
Proffering a solution, Atiku emphasized the need to create a conducive environment, urging the government to explore other avenues for funding infrastructure projects, such as restoring investor confidence and leveraging private sector resources.
“There are no easy ways to address the challenges of funding infrastructure development in Nigeria,” Atiku said. “Mr. Edun must introduce the necessary reforms to restore investor confidence in the Nigerian economy and leverage private resources, skills, and technology.”
The backlash sparked by this move by the Federal Government to unlock N20 trillion from pension funds for infrastructure projects stems from past episodes of mismanagement of public funds that have created distrust.
The emphasis this time is on adhering to legal frameworks and exploring alternative funding solutions as the government seeks to address the nation’s infrastructural challenges without compromising the financial security of its retirees.
The Nigerian government’s bad reputation in paying pensioners has created a huge trust gap. Thus, the focus will be on whether the government can balance its ambitious infrastructure goals with the need to protect and preserve the hard-earned savings of Nigeria’s retirees.