Pension fund manager, Petra Trust Limited, has clinched a partnership with emerging markets financial services investor, LeapFrog Investments, in a deal that is seen as a vote of confidence in the country’s pension regime and financial services sector.
Petra, among the top three largest corporate trustees, which manages second and third tier pension funds on behalf of schemes and individuals with nearly 1,000 pension schemes in its portfolio, is hoping to leverage the financial muscle, experience and expertise of LeapFrog in Africa and Asia to rope in more Ghanaians to save towards their pensions under the three tier system, especially for people in the informal sector.
Under the deal, LeapFrog, which until recently held majority shares in Express Life Insurance Company, is injecting an undisclosed amount of money as equity for 25 per cent ownership of Petra Trust. The investor with a purpose normally has a period within which it exits the partnership.
The investor will not be engaged in the day-to-day management of the trust but would put its expertise in micro insurance and knowledge of the informal sector and the financial muscle at the disposal of Petra to enable it to reach out more to the informal sector of pension clients.
“This investment from LeapFrog is a vote of confidence in the pensions industry, businesses and the country as a whole. With the injection of capital and expertise, Petra will be able to invest in expanding infrastructure to better serve existing clients and grow our market reach,” the Managing Director of Petra Trust, Mr Kofi Fynn, told the press in Accra yesterday.
He later told the Daily Graphic that in the next few months, Petra Trust would roll out a number of products for the formal and informal sectors. The products would be easy to participate in, simple to be understood by all and their purpose clear.
“We started Petra Trust in 2011 with the idea that everybody can have a secure financial future and the pension law allows us to express the idea through pensions.
“With LeapFrog, it allows us to accelerate the pace of growth and the reach for our pension products not only for the employed or the working population, but every single Ghanaian and we hope we can leverage the expertise and capital that LeapFrog brings,” Mr Fynn added.
The Deputy Managing Director and Co-Founder of Petra, Mr Chris Adu Hammond, explained that LeapFrog, which was geared at financial inclusion and specialised micro pensions would help the indigenous pensions build capacity to reach out more into the informal sector.
The Head of LeapFrog Investments in Ghana, Mr Doug Lacey, said the partnership would provide Petra with the muscle to design products and expand its reach in the fledgling pensions industry which had a lot of prospects due to the regulatory framework.
Mr Lacey praised Ghana’s receptiveness of foreign direct investment and local businesses were positive and comfortable working with foreign investors, saying “it is the strong pensions framework that compelled us to invest in this market.”
Ghana’s reformed pensions industry kicked off in 2008, with the passage the National Pension Act, 2008 (Act 766) to create a contributory three-tier pension scheme to replace the previous Social Security CAP 30 and related schemes.
The three-tier scheme comprises a mandatory basic national social security scheme with an improved system of benefits; occupational or work-based privately managed pension scheme mandatory for all formal sector employees, and voluntary provident fund and personal pension scheme.
The National Pensions Regulatory Authority (NPRA) is responsible for regulating and monitoring the operations of schemes and ensuring effective administration of all pensions in the country.