Using Pension Funds for Infrastructural Developments in Nigeria
President Buhari has approved the establishment of an Infrastructure Company, wholly focused on critical infrastructural investments in Nigeria. This was disclosed in a tweet by the official handle of the Nigeria Presidency and it noted pension funds as part of the sources of finance for the Infrastructure Company.
The Presidency said that the Infrastructure Company (InfraCo) will raise funding from the Central Bank of Nigeria, Nigeria Sovereign Investment Authority in charge of the Sovereign Wealth Fund (SWF), pension funds and local & foreign private sector development financiers.
Using pension funds for Infrastructural developments have raised questions because Retirement Savings Account (RSA) holders want security and good returns for their pension funds. RSA holders must be aware that it is not mandatory for Pension Fund Administrators (PFAs) to invest in whichever instruments the Infrastructure Company decides to use to raise funds.
Section 85 of Pension Reform Act 2014 mandates PFAs to invest pension funds with the objectives of safety and maintenance of fair returns on amount invested. Therefore, Pension Fund Administrators (PFAs) will only invest pension funds in the Infrastructure Company instruments if they are convinced that it has better returns than other investments within the Investment Regulations limits for the benefits of the RSA holders.
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