Minimum capital for Pension Trustees to go up

Minimum capital requirement for private pension fund trustees in the country is to be adjusted upwards, the National Pension Regulatory Authority has revealed. The Authority says it has started negotiations with the various fund trustees to raise the minimum capital requirement from the current one million cedis but did not give details regarding the percentage of increment. Corporate Affairs manager of the Authority, Emmanuel Awuku Dagbanu, explained the move has been necessitated by the fact that “the pension fund is multiplying and there is the need for insurance for all those who are managing the scheme”. He expressed the hope that a decision would be taken on the matter once the new board for the Authority is constituted. Speaking at a news conference on Wednesday in Takoradi, he said a total of GHC8.3 billion has accumulated under the tier two and three of the scheme between 2010 and July 2017. Mr. Dagbanu said the two tiers alone constitute 4.5 per cent of the national Gross Domestic Products. The Authority, he said, is looking forward to overtake both insurance and banking sectors with regards to pension fund accumulation, adding “since the pension fund is growing… we can accumulate a lot of money for developmental projects in the country”. Currently Ghana is operating on three-tier pension scheme which encompasses both formal and informal sectors contributions. The Tier one is mandatory for all formal sector workers and it is managed by the Social Security and National Insurance Trust. On retirement, beneficiary receives monthly pension pay. Tier 2 is mandatory for formal sector workers but managed by private trustees. On retirement, beneficiary receives lump sum The Tier 3 is voluntary for informal sector workers. Under it is the provident fund. Both formal and informal sectors can contribute under tier 3. Mr. Dagbanu observed that informal sector workers enrolment has been very low despite several sensitization programmes. The situation, Mr. Dagbanu blamed on inconsistent services of some microfinance institutions in the country. He said most informal sector workers have had sour experiences with these microfinances hence reluctant to enroll on the tier three pension scheme. “Because of the activities of some ‘susu’ or microfinance companies before … it is very difficult to sell pension to informal sector …so this is one of the major challenge for the Authority” he noted.

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By Loveridge Ampratwum Okyere||Ghana]]>