Pension funds the world over have been identified to be a major source of long-term funding for governments to transform an economy.
Unfortunately, this has not been the case in Ghana in spite of huge sums of money accrued to the pension scheme. Against this background, the time has come for pensions to be taken seriously as a major driver for economic transformation.
As the state pension fund stands at an all-time high, privately managed pension funds have also maintained high growth rates over the past four years, with contributions under the tier two and three schemes hitting an all-time high of GH¢8.3 billion at the end of July, this year.
The amount comprises funds accrued in the temporary pensions fund account (TPFA) at the Bank of Ghana (BoG) and total assets under management (AUM) by licensed trustees.
As of June this year, total accrued contributions in the TPFA for public sector workers who draw their salaries from the Controller and Accountant General’s Department (CAGD), stood at GH¢2.2 billion.
Record growth in the state's pension fund stands to deliver some relief for fiscally strapped sectors of the economy.
Over the past four years, growth in the tier two and three pension funds has averaged 70 per cent on a yearly basis, as more employers and employees come to terms with the three-tier pension scheme introduced in 2010.
From a modest sum of GH¢805.1 million in 2012, tier two and three contributions, which are managed by private schemes, rose to GH¢2.6 billion in 2014 before closing last year at GH¢6.8 billion.
The increment from GH¢6.8 billion in December 2016 to GH¢8.3 billion in July this year, represents a growth rate of 22.1 per cent within the seven-month period, consistent with the average annual growth rate.
The strong growth in the pension funds is good news for the economy, given the multiplier effects. The funds are a good source of liquidity for the financial markets, where a chunk is invested in equities and other money market funds.
Today, the country’s pension’s regulator, the NPRA, will join players in the pensions’ industry, as well as business leaders for an executive business meeting over breakfast at the Labadi Beach hotel.
The meeting, which is expected to draw business leaders from the various sectors of the economy, will be held on the theme: “Role of pensions in national economic development and sustainability.”
Today’s breakfast meeting is meant to provide policy makers and stakeholders a common platform to deliberate on happenings in the budding industry.
The views, recommendations and conclusions to be reached are expected to set the stage for reforms in the pensions sector, which is now enjoying tremendous growth following the introduction of the three-tier scheme in 2010.
We expect that the outcome of the deliberations will be another source of vital information for the managers of the pensions funds in the country and the government as a whole. It is our belief that the recommendations will be implemented in the best interest of the state. — GB