Business News of 2013-12-01

Private pension schemes mobilise Ghc1.1bn

Private pension scheme funds have mobilised Ghc1.1 billion to support national development initiatives since they were established in 2010.

The Director of Regulation at the National Pension Regulatory Authority (NPRA), Mr Amartey Vondee, who made this known at a symposium in Accra yesterday, said 114 private pension schemes had been established so far.

Given the relative short time that private pension scheme funds had been in operation, Mr Vondee said the private operators had done extremely well in resource mobilisation.

He urged companies and individuals to register with the private pension scheme funds.

Mr Vondee said 13 guidelines had been published to direct the operations of the private pension schemes on issues such as their investment, ICT, corporate trustees, pension fund managers and custodians.

He outlined some of the challenges confronting the NPRA as inadequate resources, low coverage of the informal sector, frequent changes in leadership at the NPRA and the lack of financial autonomy for the NPRA.

The implementation of the new pension scheme started on January 1, 2010, following the enactment of the National Pensions Act on December 12, 2008.

The new scheme is in three tiers.

The first tier is the basic national social security scheme, which incorporates an improved system of the previous SSNIT benefits. It is mandatory for all employees in both the private and the public sectors.

The second tier, which is an occupational (or work-based) pension scheme and mandatory for all employees, is privately managed. It is designed primarily to give contributors enhanced lump sum benefits.

The third tier voluntary provident fund and personal pension scheme, supported by tax benefit incentives, is for workers in the formal sector who want to make voluntary contributions to enhance their pension benefits and also for workers in the informal sector.

For his part, the acting General Manager of the Counsel Division of SSNIT, Mr Peter Hayibor, said the new pension policy needed to be reviewed to make it sustainable.

According to him, the 2.5 per cent deducted from the SSNIT contribution income of 13.5 per cent for the National Health Insurance Scheme (NHIS) would affect the future sustainability of the first tier of the scheme if not reviewed.

Mr Hayibor indicated that under the old and the new law, Ghc642 million was transferred to the NHIS between 2004 and 2012.

He said about 1.2 million people had been registered under the first tier, as well as the second tier, of the scheme.