The federal government has borrowed a whopping N8.29 trillion from Pension Fund Assets which stood at N12.9 trillion at the end of August 2021, LEADERSHIP revealed.
Even though an earlier attempt by the federal and state governments to borrow directly from the pension funds was met by a stiff public resistance, thus nipping the idea in the bud, the federal government has continued to dominate in utilisation of the pension pension funds’ assets, howbeit indirectly through investment in federal government securities.
The federal government, through the National Economic Council (NEC), had in 2019 announced plans to borrow N2 trillion from the pension funds to finance the development of infrastructure. The decision sparked a lot of backlash as Nigerians unanimously kicked against the move. Had the plan worked, it would have become the norm for governments to borrow directly from the pension funds.
Pension fund investment in federal government securities still accounted for the bulk of 64 per cent of total pension fund assets, crowding out investments in other sectors of the economy, even as it dropped by about N220billion from N8.51trillion in July, 2021 to N8.29 trillion as of the end of August 2021.
The drop, according to LEADERSHIP investigation, was as a result of drop in yield of bonds and treasury bills, which started last year, hence, Pension Fund Administrators (PFAs) were divesting from this investment outlet, into better investment windows that give better returns.
Pension fund operators have been seeking investment alternatives besides government bonds and treasury bills to increase returns on investment on pension assets as yields from FGN securities decline.
Hence, as the previous investment matured, pension fund operators were divesting the proceed in money and capital market instruments.
