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PenCom plans investment in housing finance


National Pension Commission (PenCom) has initiated moves that will ensure that part of the N3.4 trillion contributory pension funds in the kitty of pension funds administrators (PFAs) are invested in the housing sector.

To this end, the Commission has proposed the review of the Pension Reform Act 2004 to enable investment of the pension funds in infrastructure development. It is also considering a scheme that will allow usage of pension contributions to part-finance acquisition of low-cost housing.

Acting Director General of PenCom, Mrs. Chinelo Anohu-Amazu, speaking recently at the official opening of the Commission’s zonal office in Ilorin, Kwara State capital, said PenCom is currently exploring the possibility of allowing contributors to utilise part of their Retirement Savings Accounts balances to part-finance the acquisition of low-cost houses. She however said that the mortgage part-financing scheme would only be available to states that have fully implemented the scheme.

Anohu-Amazu noted that only Niger State has fully complied with the contributory pension scheme in the North Central zone, and appealed to other states in the zone to adopt the scheme in order to avail their employees of its many benefits. “It is our expectation that when they eventually come on stream, these facilities would be availed to states that have fully implemented the scheme” she said.

In a related development, PenCom recently submitted a memorandum seeking to amend the Pension Reform Act (PRA) 2004 at a joint public hearing of the Senate Committee on Establishment and Public Service and the House Committee on Pensions, to allow investment of the pension funds towards national development.  Also, PenCom is considering a scheme that will allow contributors utilise part of their Retirement Savings Account (RSA) balances to part-finance acquisition of low-cost housing.

The Ag PenCom DG recalled that stakeholders have been clamouring for the funds to be utilised for national development. “There is a consensus among stakeholders that the PRA should facilitate the optimal utilisation of pool of funds generated by the Contributory Pension Scheme towards national development,” the memorandum noted. PenCom however insisted on safety measures for the pension fund assets.

Speaking in the same vein, a financial expert and Chief Executive Officer, MHOA Consulting firm, Mustapha Hussain, said that the N3.4 trillion pension assets remain integral part of the Nigerian financial markets which if put to judicious use could bridge the infrastructure gap in the system. “Pension funds can go into infrastructure through a dedicated infrastructure bond that is tied to a specific project,” he stated.

Hussein cited Chile as an example of a country that used pension funds to finance the national housing deficit, through mortgage bonds that were issued and guaranteed by the government. According to him, Chile’s pension authority sets aside part of pension funds in a pool and people borrow the money to build houses, particularly those who are contributors to the scheme. He added that the government guarantees that the money would not be lost, suggesting that Nigeria can borrow a leaf from Chile and invest pension fund in those kinds of projects.


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