Why we can’t risk investing $3.6bn pension funds in any sector –Pencom

The National Pension Commission has said its management would not risk investing pension funds in any sector due to insincerity plaguing the system.

This is in contrast to recommendation of some interest groups calling for the deployment of about $3.6 billion of the pension funds to finance the 2016 budget.

This was confirmed by the Head, Investment Supervision Department, of the Commission, Ehimeme Ohioma, who stated that there had been pressure on management to release the fund, kept in trust for the pensioners.

Hear him: “Any investment portfolio must be commercially viable and self-financing – generate cash flows to repay itself overtime; and bid/concession processes must be open and transparent.”

The total pension funds now stands at $3.96 billion as of the end of September 2016.

Ohioma said that the investment in infrastructure would be beneficial to Nigeria and its citizens as adequate infrastructure development would improve the standard, create and sustain employment, promote entrepreneurship, enhance returns on pension fund investments as well as increase the pool of pension savings for economic development.

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The expert observed that the current stock of infrastructure was inadequate to support the present and future socio-economic needs of the country, including the imperative to diversify the economy away from oil.

He said that the availability of long-term financing was a critical factor, adding that it was clear that private finance was needed to supplement government’s constrained financial resources.

Ohioma also said that pension funds remained a potential source of private financing to fund infrastructure in Nigeria, but that the funds could only be invested indirectly through structured instruments, such as bonds and funds.

“He said the minimum requirements/criteria for pension fund investments in infrastructure, as stipulated in the investment regulation, are very robust and provide adequate safeguard for pension fund assets,” he said.

Another expert, Mr. Herbert Ujah, said there must be open and transparent transactions’ procedures and processes, in terms of bidding process, contractors’ selection and pricing, among others.

According to him, there must be policies to attract global infrastructure advisors and managers, in order to build capacity and facilitate knowledge/skills transfer to Nigerians.

 

 

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