Use Tier 2 funds for mortgage

BY: Daily Graphic
General Manager at the Republic Bank (formerly HFC Bank), Mr Charles Bonsu
General Manager at the Republic Bank (formerly HFC Bank), Mr Charles Bonsu

The National Pensions Act has been described as one of the best in Africa and the world at large.

It makes provision for the establishment of a three-tier scheme consisting of a mandatory basic national social security scheme, a mandatory fully funded and privately managed occupational pension scheme and a voluntary fully funded and privately managed provident fund and personal pension scheme.

Among others, the main objective of the three-tier pension scheme is to provide for pension benefits that will ensure retirement income security for workers and better standard of living.

One of the indices of development in any modern society is the ability of the citizenry to afford decent housing. Aside from being basic, a decent house is the dream of every worker, such that a few manage to start putting up houses which they hope to complete after many years or upon retirement. Those who are not able to start anything of the sort wait till they retire, so that they utilise the little that they receive from their pension to acquire places for themselves.
In most cases, these houses are never completed, as the cost of building them is way beyond the pockets of the retirees. The reality is that the retirees are left with uncompleted buildings, while their gratuity is depleted, sending most of them to their graves prematurely.

A clear majority, meanwhile, opt to continue to stay in rented rooms, mostly in compound houses, with the attendant discomfort. Sorry cases abound of helpless, poor, old retirees being forcibly ejected from their homes because they cannot pay rent.

Is it strange, therefore, that workers who lack discipline are caught up in the web of corruption, obviously to secure their future?

As much as the Daily Graphic would never condone corruption or justify its practice, we think that if the fight against corruption can be decisively won, then as a country we should not only make it unattractive with punitive measures but also ensure that the average worker is able to acquire the basic necessities of life.

With the current situation, we wonder how many workers will be able to put up their own houses or buy them in their working years or even after. A survey report released in 2014 by a real estate research firm, Housing Data Centre, revealed that about 85 per cent of Ghanaians cannot afford to buy houses. Currently, depending on location, an average two-bedroom house costs between GHc100,000 and GHc150,000.

Interestingly, while the tier two pension deductions are meant to provide long-term financing for contributors, the current practice is that they are being used for short-term investments.

We, therefore, agree with Mr Charles Bonsu’s suggestion to the National Pensions Regulatory Authority to ensure that tier two deductions are used for mortgages for workers. This will help many workers to use their contributions to own homes by the time they retire from active service.

As he asserted, all that is required is for the pensions regulatory authority to direct fund managers to direct the funds to mortgage purposes.

We hope the fund managers are listening. We also urge the government to put in place policies regarding the use of the funds so that we can provide houses to the working people in the country.

The country has its own socio-economic challenges but with the right approaches we can in our small way address the housing problem that seems to be getting worse over the years.