TUC: USE PENSION FUND AS COLLATERAL FOR HOUSING LOANS

“Congress has repeatedly made its position on this vexing issue very clear: the pension scheme was informed by the need to assuage the poverty of and difficulties faced by retirees and not to raise money for provision of any infrastructure nor investment at the instance of the rich’’, TUC said in a statement signed by President and Acting Secretary, TUC, Comrades Bobboi Kaigama and Simeso Amachree.

The TUC used the opportunity to reiterate that the 25 percent of total contribution paid at first instance to workers on retirement is too small.

“Anything less than 50 percent defeats the purpose of the scheme. As it stands today many states claim inability to pay the national minimum wage of N18,000, a sum that is itself barely enough to take the worker home talk less of paying the bills for his family’s shelter, upkeep and development’’, TUC said.

It noted that infrastructural development remains the duty of the government.
“It is a key driver and a critical enabler of sustainable growth all over the world, as it provides a unique avenue for the public and private sectors of the economy to thrive. It is also critical in attracting foreign investors.

“Nevertheless, rather than appropriating the monies saved from workers’ contributions to perform the government’s responsibility to fix roads, electricity and other social infrastructure, we recommend that the funds be utilised in projects that are of direct benefit to the retirees and other workers, such as fixing the chronic housing deficit. And this must be done with rules for proper accountability well in place’’, it said..

It noted that housing deficit is a major problem facing Nigeria, adding that many people live on the streets while most workers cannot afford a decent home.

According to TUC, some workers resort to borrowing from banks to build their homes, and that at forbidden interest rates as most of them end up losing the houses to the banks because of inability to repay the loans and accumulated interests.

While appreciating the effort of mortgage institutions and developers, TUC observed that their houses are unduly expensive, adding that here should be rules that allow workers to borrow from their retirement savings at friendly interest rates to build houses, using accumulated savings as collateral.

“Thus a contributor who has N5 million in his Retirement Savings Account (RSA), for example, should be at liberty to borrow as much as N3m million from it at single digit interest rate.

“This makes a lot more sense than the present scenario where the same contributor may find himself having to approach a bank to borrow the N3 million at 30 per cent interest rate to build a house. Equally appalling is a situation where a contributor pays about N8 million to mortgage institutions for a house worth N5 million’’, it noted.