‘PenCom didn’t give Fed Govt N10tr loan’

National Pension Commission (PenCom) is not a bank that warehouses funds or gives loans, its Director-General  Mrs. Aisha Dahir-Umar said at the weekend.

According to her PenCom is not a custodian of retirees funds or a body in charge of disbursement.

She said contrary to assumption, pension fund assets are not managed by PenCom.

She, however, attributed delay in payment of retirement benefits to some Federal Government retirees and deceased employees to late payment of Accrued Pension Rights

The Director-General made the clarifications during an interactive session with the media against the backdrop of insinuations that PenCom had warehoused N15trillion pension funds.

She said: “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.

“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 Pension Funds Administrators (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 the Federal Government of Nigeria (FGN) debt instruments.

“The objectives are safety and fair returns. All these are in line with the provisions of the enabling law, the Pension Reform Act 2014, and the rules issued by the commission.”

She added: “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.

“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 Exchange.”

She also responded to claims that PenCom was owing Federal Government retirees arrears of pensions as well as insinuations that Pension Fund Administrators (PFAs) are not fulfilling their obligations to retirees.

Mrs. Dahir-Umar said 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.”

But she said there is no cause for alarm on pension fund assets because the Federal Government has been meeting its obligations.

“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 gave further explanation on outstanding benefits to Federal Government retirees.

She said: “The delayed payment of retirement benefits to some Federal Government retirees and deceased employees is 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.

“Payment of the accrued rights is subject to release of funds by the Federal Government. So, it is 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 all those enrolled under the CPS had been receiving their benefits through their PFAs and there was no such complaint before the commission.”