IMANI Ghana: Pensioners’ money used to buy Merchant Bank?

Policy Think Tank, IMANI Ghana says there are serious allegations that funds used by Fortiz for the purchase of Merchant Bank were made available to them by the Bank of Ghana via the Temporary Pension Fund Account or the Tier 2 Pension funds, being held at the Central Bank.

According to a statement issued by IMANI, the allegations become serious in view of the fact that one Mawuli Hedo, a director of Fortiz, is also a director at First Banc, the Scheme Administrators of the Temporary Pension Fund Account.

IMANI recalled that in January 2010, the TPFA was set up to provisionally administer the Tier 2 contributions, pending the licensing of Trustees and the registration of the Pension Schemes.

According to the think tank, employers, from January 2010, remitted 5% (Tier 2 contributions) of their employees’ salaries to the TPFA, adding that this continued for most employers till October 2012.

“First Banc was appointed to be the Administrators of the TPFA, with Bank of Ghana serving as the Custodial Bank,” the statement added.

The statement indicated that the licensing of Corporate Trustees, Fund Managers and Pension Fund Custodians - purposely established to fully administer the Tiers 2 and 3 schemes -- was only done by the National Pensions Regulatory Authority on March 16, 2012.

“The NPRA finally, after almost a 3-year wait without much information to workers and service providers, registered Pension Schemes at the end of October 2012. Full implementation under the reforms - Act 766 - thus started in November 2012,” the statement noted.

IMANI pointed out that even though the National Pensions Regulatory Authority indicated that it was going to invest the Temporary Pension Fund Account, which was being administered by First Banc, in Treasury Bills pending the registration of Pension Schemes, provisional statements released by NPRA in October 2012 indicated a return on investment of 2.75% per annum.

This, IMANI noted, was disappointing, given that the average Treasury Bill returns between January 2010 and October 2012 was around 15% per annum, adding that the same provisional statement covered a period of 18 months instead of the 34 months period (January 2010 to October 2012) over which contributions had been made into the TPFA.

This, according to the policy think tank, raises fundamental questions as to what was done with the proceeds from the TPFA administered by a director of FORTIZ.

“One of the serious implications of this situation is that people who were 54 years and younger when implementation started in January 2010 WILL NOT get the full value of their lump-sum benefits, upon retirement at 60. Thus, all Ghanaian workers - both private sector or public sector workers - who were 54 years old or younger as at January 2010 will not get their full lump-sum benefits from Tier 2 Pension Schemes as NPRA is still holding on to 34 months of workers contributions and accrued benefits. There is no word from the National Pensions Regulatory Authority as to when these funds will be paid to the contributors or even how it will be paid,” the statement noted.

IMANI recommended that all activities of the TPFA should be audited by an external auditor, adding that accrued contributions in the TPFA should be transferred into the registered Tier 2 Pension Schemes selected by the various employers.

Also, the think tank demanded that the Bank of Ghana should submit a report on its stewardship of the TPFA.