NPRA says the pensions coverage in the informal sector is extremely low
The National Pensions Regulatory Authority (NPRA) is targeting within the next four years to boost the coverage of pensions in the informal sector, which stood at 3 percent in 2019.
In an interview with Business24, Nana Sifa Twum, Head of Corporate Affairs at the authority, said: “The pensions coverage in the informal sector is extremely low, and our target for the next three to four years is to improve it to 30-40 percent.”
One of the key initiatives targeted at extending the informal sector’s coverage was the World Bank’s “First Initiative Project”, of which the first phase was completed in 2019. The initiative is focused on delivering an actionable pensions coverage strategy to guide the authority and its stakeholders to unlock the informal sector.
Part of the strategy includes the identification of a centralised mobilisation platform known as “The Switch”.
This is expected to be a universal switch for the pensions industry in Ghana, which would promote interaction with participants with different contribution collection channels.
The authority believes that leveraging pensions contribution collection this way would be critical to opening up the informal sector for participation in Ghana’s three-tier pension scheme.
In 2019, the authority enhanced the process for establishing specialised schemes for cocoa farmers, fishermen, and other informal sector groups.
The authority believes that the pension system can accommodate innovation in developing private pension products, including leveraging the mobile money platform to make pensions accessible, relevant and rewarding for informal sector workers.
The authority says it is exploring other strategies including collaboration with government and other financial sector regulators to aggressively promote informal sector coverage as part of the larger national policy on financial inclusion.
