Finance Minister clears air on ‘borrowing from pension fund for infrastructural development’

The federal government says it has no intention to “illegally” access the pension fund.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, spoke on Thursday in a video uploaded by the ministry on X.

At the end of the federal executive council (FEC) meeting, Edun said there were plans to borrow from the pension fund and other locally available resources for infrastructure development in the country.

He said the government was focused on tapping into domestic financial resources, particularly pension and life insurance funds, to leverage local funds for national growth.

However, on May 15, former vice-president, Atiku Abubakar, criticised the plan, saying it was “another attempt to perpetrate illegality by the federal government”.

Abubakar said the federal government must not act contrary to the provisions of the extant regulation on investment limits “to which Pension Funds can invest no more than 5% of total pension funds’ assets in infrastructure investments”.

Clarifying his statement, Edun said the federal government has no intention to violate the pension fund regulations.

“It has come to my notice that stories are making rounds that the federal government plans to illegally access the hard-earned savings and pension contributions of workers,” he said.

“Nothing could be further from the truth. The pension industry, like most of the financial industry, is highly regulated. There are rules, limitations about what pension money can be invested in and what cannot be invested in.

“The federal government has no intentions whatsoever to go beyond those limits or go outside those bounds which are there to safeguard the pension of workers.

“What was announced to the federal executive council (FEC) – merely for noting, no approval was sought for, or any action whatsoever – was that there was an ongoing initiative, drawing in all the major stakeholders in the long-term savings industry, those that handle funds and are available over a long period.

“To see how within the regulations and laws, these funds could be used maximally, most effectively to drive investment in key growth areas, infrastructure, housing, and of course, to find a way to provide Nigerians with affordable mortgages.

“Within this context, there is no attempt or no consideration to provide less safe investments for pension funds or even insurance funds or any investment funds that are made available.

“No attempt whatsoever to increase the risk, to lower the returns that would otherwise be earned.

“We must remember that the federal government possesses the ability to provide guarantees where stocks are needed to unlock funding that will lead to growth, the creation of jobs and the alleviation of poverty.”

Nigeria’s total pension fund assets stood at N19.6 trillion as of March, 2024.