Privately managed pension funds have maintained their robustness in growth 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.
Data from the pensions sector regulations, the National Pensions Regulatory Authority (NPRA), showed that of the GH¢8.3 billion, some GH¢2. 7 billion, made up of contributions and returns, was still lodged at the TPFA, awaiting transfer to the various trustees.
The data further showed that total accrued contributions in the TPFA for public sector workers, who draw their salaries from the Controller and Accountant General’s Department (CAGD) as at the end of June this year stood at GH¢2.2billion.
NPRA’s Chief Executive Officer, Mr. Hayford Atta Krufi, said the authority was ‘closely working towards the transfer of contributions of public sector workers in the TPFA from January 2010 to August 2016.”
He was speaking to the paper ahead of the GRAPHIC BUSINESS/ STANBIC BANK Breakfast Meeting on Tuesday, September 19 at the Labadi Beach Hotel in Accra. The meeting is on the theme, “The Role of Pensions in Economic Development.”
On when the funds will be transferred from the TPFA, Mr. Krufl explained: “A number of progressive meetings have been held with key stakeholders, including the trustees of the public sector schemes, their administrators, the government and the CAGD.”
Impact on 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.
Although encouraging, the Chief Executive Officer of Axis Pensions, Mr Afriyie Oware, told the GRAPHIC BUSINESS his outfit expected ‘ the growth rate to edge up in the coming years.
With many people now embracing the tier three, which is a voluntary scheme, Mr. Oware said he expected trustees, both public and private workers to contribute more to help drive up the growth.