Guidelines to streamline 3-tier pension scheme soon
The National Pensions Regulatory Authority (NPRA) is in the process of developing guidelines to streamline a section of the three-tier pension scheme which permit contributors to secure a mortgage or a primary residence using the second and third-tier pension benefits.
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The document, among other things, will reduce the burden of meeting huge mortgage requirements by prospective home buyers in the country.
“Plans are far advanced for the preparation of the guidelines, so very soon all the trustees will receive their copies in order for contributors to use their future lump sum under the second and third tier to secure a mortgage for their primary residence,” the Assistant Corporate Affairs Manager of NPRA, Mrs Rosina Akrofi, told the GRAPHIC BUSINESS in Accra.
She explained that the new scheme also provide contributors to transfer their accrued benefits from one scheme to another as they change employment.
Mortgage industry
The decision follows numerous reservations by some players in the mortgage industry that the authority has not worked satisfactorily to get mortgage loans for workers.
The renewed calls from the mortgage industry also come after government’s proposed housing fund that seeks to cushion low-income earners in the acquisition of housing properties and reduce the country’s housing deficit.
The players also believe that the strict enforcement on funding mortgages with tier two and three pension benefits should facilitate the smooth operation of the housing fund.
National Pension Act
The National Pension Act, 2008 (Act 766) established the NPRA to regulate and monitor the operations of the scheme and ensure effective administration of all pensions in the country.
Mrs Akrofi explained that the new three-tier pension scheme comprises two mandatory schemes and a voluntary scheme.
Under the first tier, mandatory basic national social security scheme incorporates an improved system of the Social Security and National Insurance Trust (SSNIT) benefits, mandatory for all employees in both the private and public sectors.
The second tier also provides a mandatory occupational or work-based pension scheme for all formal sector employees, but privately managed and designed primarily to give contributors higher lump sum benefits than previously available under the SSNIT pension scheme.
The third tier provides a voluntary provident fund and personal pension schemes supported by tax incentives, targeting workers in the informal sector and also designed to provide additional funds for formal sector workers who want to make voluntary contributions to enhance their pension benefits.
Informal sector
Urging the informal sector to save for the future, Mrs Akrofi said the government had specially introduced a pension scheme for the support of the informal sector.
She said provision had been made in the third tier voluntary personal pension schemes to cater for the peculiar needs of workers in the informal sector of the economy who constituted about 85 per cent of workers in the country.
This means that farmers, fishermen, market women, drivers, traders and other self-employed workers could now participate in a pension scheme which will take care of them in their old age.
According to her, the design of the new pension scheme would ensure that workers in the informal sector, just like their counterparts in the formal sector, also received monthly pensions, as well as lump sum benefits when they retire.
She said contributions from the informal sector workers would be divided into two accounts; namely retirement account and savings account, explaining that members of the scheme could withdraw from the savings account to improve their businesses and payment of school fees while contributing.
Mrs Akrofi noted that just as workers in the formal sector earned a regular income during their retirement, the informal sector workers who joined and contributed to a pension scheme under the group or personal pension schemes would also enjoy pension benefits in a form of lump sums and monthly or quarterly pension at their old age.