Obasanjo calls for caution in investment of pension funds

Olusegun Obasanjo, Nigeria’s former president and pioneer of pension reforms in the country, has called on operators and regulators of the industry to exercise caution in the investment of the fund.
Obasanjo, who said the pension reform was undertaken to deal with the challenges and huge pension liability confronting his administration in 1999 observed that the fund must be preserved so that those who have contributed would have it when they need arises.
Speaking at the World Pension Summit 3 with the theme “Pension Innovations: The Africa Perspective”, the former head of state called for caution in introducing innovations into the pension scheme, to ensure that Nigerians’ access to their pension funds when they retire is not jeopardised.
Commenting on the essence of saving for the future, he said, “I remember when I was in government and I told, particularly, the governors, ‘please let us save for the rainy day.’ They said no. There was no rain at that time, now that the rain has come, there is nothing we can fall back on to cushion the effect.”
Obasanjo further commended the secure nature of the pension scheme, observing that despite the many years of sleaze in the Nigerian polity, the pension funds were not touched.
He said, “One of the things that make me very happy in the pension scheme is that in the last five years, when almost everything goes, concerning public funds, pension funds remained sacrosanct, I believe that the pension fund is something we must preserve, no matter what we do.”
He however emphasised the need for the Federal Government to utilise the country’s pension funds in the development of the country, especially in the areas of infrastructural development, such as in housing and road construction.
“We must also find a way of using the pension fund in our development, particularly in infrastructural development. There are examples we can look at all over the world. For instance, in housing, Singapore is a good example where they have used their pension fund to make sure that there is no Singaporeans that does not have and even own a house. There is no reason why we cannot tow that line.
”He maintained that Nigeria has strong laws and regulation for the pension scheme, warning that while efforts are ongoing to introduced innovation in the scheme, the law should not be diluted and it must also be done cautiously.
“I like the theme of the programme: pension, innovation and sustainability. But I will add two things; your innovation must be with caution. Now, when people have to work all the days of their lives that they are strong and they make contributions for their future, we cannot afford to be too adventurous when making innovation. Because when they need the money, it must be there,” he advised.
Obasanjo however noted that the innovation should focus on how to capture more people into the pension scheme, especially individuals in the informal sector.
“Part of the innovation and issues that we should be discussing is: ‘how do we capture more salaried people into the pension scheme?’ Second point is: ‘how do we capture the self-employed?”
Chinelo Anohu-Amazu, director general, National Pension Commission, in her welcome speech, said extant indices show that Africa’s infrastructure remains by far the most deficient and costly amongst developing countries.
Amazu said bridging Africa’s infrastructure deficit would require sustained spending of about US$93 billion per annum, which translates to about 15 percent of Africa’s GDP.
“This huge challenge, I believe, can be surmounted by a coordinated, multifaceted approach to development and the integration of domestic funding sources such as pension funds, and foreign institutional investors.”
Meanwhile, President Muhammadu Buhari, who declared the summit open, said the Federal Government has commenced moves to defray inherited pension liabilities at the Federal level.
Represented by Winifred Oyo-Ita, the Head of Civil Service of the Federation, also stated that the Federal Government had mandated the National Pension Commission (PenCom) to extend the pension scheme to the informal sector.
According to Buhari, part of the commitment of this administration is to ensure that within the scarce resources available to it, the inherited pension liabilities of the Federal Government are being addressed. He further disclosed that PenCom had been asked to step up its enforcement drive to ensure full compliance with the pension scheme by public and private sector institutions, in line with the enabling law.
He declared that the Federal Government is working to ensure that the required channels and support are put in place to ensure that pension funds and other investors make meaningful contributions in bridging Nigeria’s infrastructural financing gaps.