Bastardised SSNIT in self-denial: Gov't converts part of debts into bonds

It has emerged that, the spirited defense of the country's pensions reforms, and the denials of government's indebtedness to the Social Security and National Insurance Trust (SSNIT) put up by the Head of Corporate Affairs, Ms Eva Amegashie this week, in response to our story in the Tuesday, April 7 edition, titled “WORKERS WAKE UP TO HARSH REALITIES…” is nothing but a cunning façade, meant to cover up the looming crisis that hangs over the scheme, Public Agenda can confirm.

In the said edition of the paper, we reported that government's indebtedness to SSNIT, estimated to be in excess of GHC8 billion is threatening the scheme's sustainability, and is a major motivation in the December 2014 amendment to the Pensions Act of 2008.

Further checks within SSNIT, following our Tuesday publication, have revealed conflicting positions among senior managers of the scheme on the status of the government debt. While the Corporate Affairs Department claims some payments have been received recently, thereby reducing the debt levels, staff of the Department are unable to provide further particulars of the outstanding debt.

What is even more revealing is the contradictory position of other competent sources within SSNIT on the matter. These sources claim that, no payment has indeed been received but rather government has converted part of its debt into bonds. If this version of how the huge government debt owed to SSNIT is being managed is to be taken for the truth, then what it means is that, government has, by its action, foisted on SSNIT a particular type of investment, which may not necessarily be the best investment option available to the Scheme. Besides, it is not clear what the rate of returns on the bonds is, and how they were negotiated.

The paper's investigations also discovered that there are two main types of government debt: those owed by state agencies and public corporations, and those borrowed directly by government, in some instances to pay salaries of soldiers.

SSNIT's main strategy for ensuring compliance and retrieval of debts owed it are: naming and shaming (advertising the names of defaulters in the newspapers), and prosecution of defaulters. It is, however, apparent that the strategy targets just the private sector (SMEs) who collectively owe about 800 percent less than what is owed by government and its agencies.

Yet, SSNIT says it is more interested in collecting what is owed by the SMEs as they could fold up anytime and run with monies due their employees. At the time SSNIT put out its last publication of defaulters (see list on page 8), Public Agenda can confirm that several state agencies including the National Pensions Regulatory Authority (the industry regulator) and the Ghana National Procurement Agency owed the Scheme several times the amount owed by the SMEs. What is even more disappointing is SSNIT's attitude to these debts.

The Scheme's managers argue that they are not worried about debts owed by government, as they will by all means be paid, no matter how long it takes. The attitude clearly does not take cognizance of the time value of money, meaning, huge sums of monies that could be invested today are locked up in government debts with absolutely no returns to the Scheme – and SSNIT sees nothing wrong.

It appears the most inhibiting factor in the work of the Compliance and Prosecution departments have been government's interferences in actions sometimes initiated to get defaulting state agencies to pay up.

The story is told of how steps taken to recover amounts owed by GNPA were thwarted by the government, leaving the debt of the agency hanging with no clarity on how to proceed further on the matter.

While SSNIT says 'naming and shaming', and prosecutions have worked in ensuring compliance of SMEs, it seems cowed in applying the same strategy to the biggest defaulters, whose indebtedness threaten to ground the scheme.

The weakness in the argument that government will pay up no matter how long it takes is clearly betrayed by the fact that, getting all contributions in on time, provides SSNIT an opportunity to avoid losses on investment earnings that arise out of delayed payments.