The Federal Government (FG) has disclosed that the N2 trillion it intends to borrow from the current N10 trillion pension funds to finance the development of infrastructure will be through bonds.
According to a source in the National Economic Council (NEC), the funds would be deployed as bonds, which would bring returns when raised and invested. The source said this is better than allowing it to lie idle.
“This is not free money; it’s through investment as bonds. It is not like the Federal Government will just dip hands into the pensions fund and begin to spend the N2tn. When it is raised and invested, it means the private sector can also access the money, use it for investment in infrastructure.
“There will be returns on investment and the principal can be recovered as well. So, the process continues, as against allowing the pension money to lie idle. The pension fund was contributed by both workers and the government as stipulated by law. The money is not for workers alone,” the NEC official told Punch.
Nairametrics had reported when the Governor of Kaduna State, Mallam Nasir El-Rufai announced the committee’s decision to tap into the pension funds. He made known that the committee’s decision was in line with the Pension Reform Act 2004, which empowers the government to borrow 20% of the fund to address national issues.
The disclosure was made at the National Economic Council (NEC) meeting presided over by the Vice President, Yemi Osinbajo, in Abuja.
El-Rufai said the funds would be used for infrastructures such as rail and power projects. He said the committee had identified three areas (rail, road and power) where the pension funds would be invested, He restated that the borrowing would be done through bonds with private companies investing in road and rail infrastructure and paying within a period of 20 years.