Pensions Regulatory Authority educates media on new Pension Scheme

Accra, Dec. 10, GNA - Mr Richard Kwame Asante, Chairman, National Pensions Regulatory Authority (NPRA), on Thursday said the new three-tier pension scheme would enhance pension benefits and increase the retirement income security of workers in both the formal and informal sectors. Mr Asante was addressing the "Meet the Press" series organised by the Ministry of Information in Accra to lay out the NPRA's plan for the implementation of the new three tier pension scheme which commences on the January 1, 2010.

He indicated that the new scheme had attractive benefits, with the main beneficiaries being workers of both the formal and informal sectors who could also use their future lump sum pension benefits as collateral to secure mortgages for their primary residence before attaining the retirement age.

Mr Asante said this would also promote the growth and development of the capital, mortgage and insurance markets, impact on the economy of the country by providing a pool of long-term funds for investments needed for national economic development.

He said various activities including the setting up of a Management Board of Trustees to manage the Temporary Pension Fund (TPF), the opening of a TPF account for the second tier mandatory contributions with the Bank of Ghana (BOG) and ensuring guidelines for transitional arrangements for mandatory schemes had already commenced and deductions are expected to start in January.

Mr Asante outlined a number of operations on the NPRA's implementation time table for the year but said it was expected that the BOG would transfer balances from the TPF into an Occupational Pension Fund Account, which would be operated by approved trustees by the close of 2010.

The NPRA Chairman explained that the new contributory three-tier scheme comprises of two mandatory and a voluntary scheme which was made up of firstly, a mandatory basic Social Security Scheme to be managed by the Social Security and National Insurance Trust (SSNIT) for all employees in both the private and public sectors and optional for self-employed. He said this category would pay only monthly pensions and related benefits such as survivors and invalidity benefits.

Mr Asante said under the second tier, a mandatory occupational pension scheme would be privately managed to mainly pay lump sum benefits, while the third tier voluntary would serve as a provident fund and personal pension scheme, supported by tax benefit incentives to provide additional funds for workers who want to make voluntary contributions to enhance their pension benefits and also for workers in the informal sector who were not catered for by the first two mandatory schemes.

He said the mandatory second and voluntary third tier schemes would be privately managed by Trustees licensed by the NPRA with the assistance of pension fund managers and custodians registered who would also be first licensed by the Security and Exchange Commission and later registered by the Authority.

Mr Asante said that the Board of the NPRA, which had been in office for over three months now, met on weekly basis to strategise to ensure that the new pension scheme started next year on a sound footing, by ensuring the development of adequate guidelines to ensure a smooth transition from the current to the new scheme.

He also said the Authority would partner with the media to transmit the necessary information and education to the wider public to ensure sound education.

He urged all employers to fully comply with their statutory obligations under the pensions law and pay their contributions promptly before the stipulated contribution day, while ensuring proper record and account keeping of their employees. 10 Dec. 09