The Chief Executive Officer of Axis Pensions Group, Mr Afriyie Oware, has called for a new strategy to guide the investment of pension funds to ensure that they served as long term capital to drive growth in the real sector.
That, he said, would also safeguard the funds of contributors and directly impact the lives of citizens.
At the 2019 Pensions Strategy Conference in Accra yesterday, Mr Oware said the current strategy where a chunk of pension funds were invested in government securities was counter-productive.
He said government borrowing went mainly into recurrent expenditure, and, therefore, it was not prudent that majority of pension funds were lent to the government.
“The real sector is the engine of growth, and that is where we should be putting money,” he said.
“Unfortunately, (managers of) pension funds have shied away from investments in the sectors that are really needed to trigger economic growth in Ghana,” he added at the conference which brought together various stakeholders in the industry.
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Mr Oware said the funds should be invested to address challenges in areas such as housing and the real estate sector.
“For us to better safeguard the retiring income securities of contributors, a paradigm shift is needed in the way we invest pension money.
In essence, a new pensions strategy is required to unlock Ghana’s economic potential,” he added.
Mr Oware also took issue with the pension industry’s little appetite for equities.
He said although the guidelines for investing pension funds gave room for up to a 15 per cent investment in equities, only a smaller proportion was being done.
He said as players in the sector, it was imperative to start thinking of more innovative ways of deploying pension capital.
The pensions confab
The conference brought together trustees from various pension funds to deliberate on issues affecting the industry.
The session was to help rebuild confidence that the situation with the currency was short term and will be rectified.
The Chief Investment Officer of Axis Pensions Group, Mr Nana Wiafe Boamah, presenting findings from a survey on 2019 Pension Funds Investment Strategy, said the banking sector sentiments generally remained positive, although the local currency volatility remained a reason why interest rates could not come down.
He said the currency failing to act as a store of value killed the confidence of holding the cedi.
The Head of Fiscal Unit of the Economic Strategy and Research Division of the Ministry of Finance, Mr Kwame Gyesaw, said the focus of the government was to maintain macroeconomic stability for which reason it would continue to pursue initiatives that would help maintain resilience in the economy.