Business News of 2012-10-10

Pensions Authority Pledges Again - New Scheme Ready Oct ending

The National Pensions Regulatory Authority (NPRA) has finally broken its long silence over the imminent collapse of the new pensions scheme, with a pledge to start full implementation by the end of October.

When done, it will bring a lot of relieve not only to workers but the private sector businesses including start-ups which are expected to have access to long term investitable funds to expand their business.

It will kick-start with the registration and licensing of the various schemes after applications have been duly evaluated.

Contributors to the scheme will also be issued with statements which are being printed. Checks by the GRAPHIC BUSINESS at the printing house indicate that the printing will be completed in a couple of weeks.

The authority told a private radio station in Accra that the contributors would be shown where to pick up their statements. They were advised to carry out a thorough check of their biodata and report any anomalies for rectification.

Following this, the NPRA would begin a comprehensive audit of the various schemes to ensure that the figures mentioned in the statements tallied.

The funds saved with the Bank of Ghana over the three years will then be transferred to the various schemes to enable them to start the investments.

According to the acting Director-General of the NPRA, Mr Sam P. Yalley, who spoke on an Accra radio station, the NPRA would also break down the accounts and pay each of the contributors with sums accrued by the Bank of Ghana.

Presently, it is not clear how much has been accumulated at the Central Bank but estimates put the figure at more than GH¢500 million.

The NPRA maintains that the Social Security and National Insurance Trust (SSNIT), which had been collecting the contributions of workers (five per cent deductions) on behalf of the NPRA, had deposited the amount in an escrow account at the central bank and invested in treasury bills.

Meanwhile, Mr Yalley said the NPRA would ensure that companies that register were those that had an updated contribution records to the pension scheme.

He noted that, it is possible that some companies have not been part of the pension scheme but were likely to take advantage of the situation to benefit from what others had contributed.

“This will not happen because we are doing a thorough check to prevent any payments to indiviuduals working in companies who do not deserve it,” he said.

In spite of the assurance from the NPRA to begin full implementation of the scheme by the end of the year, there are still doubts on people’s minds as to whether the authority can keep its words.

The NPRA has already set three deadlines for the licensing of the pension schemes of companies but postponed all without concrete reasons.

The first deadline of April 30, 2012 was changed to June 2012 and subsequently to August 31, 2012. As it is obvious, this deadline is long past, without a single pension/provident fund scheme licensed.

The situation is creating serious anxiety among players in the industry who claim that neighbouring Nigeria five years ago used only a month to transition after a similar reform.

Some of the scheme’s managers’ in-waiting had told the Graphic Business on anonymity that series of meetings held with the NPRA to find a solution to the problem had proven futile.

“The fate of the pension reform hangs in the balance and therefore needs serious intervention to keep the dream alive”, one of the managers said.

The NPRA set up a Temporary Pension Fund (TPF) in January 2010 to provisionally administer Tier 2 pensions, pending the licensing of Trustees.

Employers have, since January 2010, been remitting five per cent of their employees’ salaries to the TPF.

There are those who have also raised some legalities about the delay in registering the various schemes.

The National Pensions Act, 2008 (Act 766) provides transitional arrangements for contributors of the Social Security and National Insurance Trust (SSNIT), the Cap 30 and other similar pension schemes to ensure a smooth transition to the new Contributory Three tier Pension Scheme. Section 208 of the Act provides that the National Pensions Regulatory Authority may issue Guidelines and codes of practice to all institutions and persons concerned with the Act.

Based on the Act, the Authority issued these guidelines on transitional matters relating to its implementation but subject to revision from time to time by the Authority.

Section 2.1 of the Act then stated that “For the purpose of these Guidelines the implementation date is the date on which deductions of contributions to the new pension scheme commences. The commencement date for the deductions of the new contribution rates is January 1, 2010. Contributions deducted for the month of January 2010 are therefore to be paid on or before February 14, 2010”.

There are serious issues raised with the TPF which was set up to achieve a wholesale transition to the second tier. This arrangement was not intended to last more than one year but, three years after it was set up, the NPRA is still said to be running the TPF under transitional arrangements.