The stakeholders
Stakeholders in Ghana’s Second Tier Pension Scheme have raised red flags over the underperformance of pension contributions, with over 70 percent reportedly sitting idle in government instruments, yielding minimal returns.
They describe the situation as a “ticking time bomb” that threatens the future of retirees and are calling for immediate reforms in how pension funds are managed and invested.
These concerns came to light during a forum organised by the Health Sector Operational Pension Scheme, which brought together pension experts, fund managers, public servants, and policy influencers to examine the state of the Second Tier Pension Scheme.
The forum revealed that while some fund managers are delivering acceptable returns, a large portion of the funds—particularly those invested in government-backed instruments—are not performing well enough to secure a stable future for workers.
Under the current structure, contributions from private sector workers alone exceed GH¢60 billion, with public sector workers contributing a significant additional amount.
Dr. Derek Boateng, Chairman of the Health Sector Operational Pension Scheme, acknowledged the macroeconomic improvements that have helped stabilise the environment for pension fund investment:
“Over the year 2024, we saw a gradual rebound with 5.7 percent growth. Inflation eased, and the economy began to stabilise. Today, we’re seeing even more robust growth from the beginning of this year,” Dr. Boateng stated.
“The exchange rate has stabilised. It started from 2024, and this improvement has created a better environment for the scheme to operate in terms of investment.”
NPRA: Mixed Performance, But Literacy Still a Challenge
The National Pensions Regulatory Authority (NPRA) reports that over 80 percent of assets under management are performing well. However, the Authority continues to express concern about low pension penetration and limited financial literacy, especially within the informal sector.
Experts Urge Diversification and Prudence
Financial expert Joe Jackson highlighted the dangers of concentrating pension investments solely in government instruments:
“Seventy-five percent of all the monies are invested in government paper. There is huge concentration risk. If a government decides to slash or restructure, we’re all exposed. We must have a second look at that,” he warned.
Forum Chairman, Isaac Bampoe Addo, issued a stern caution about the misuse of pension funds:
“Pension funds are not government funds. Under the Three-Tier Pension Scheme, there are clear structures. It’s disturbing when you turn on the radio and hear politicians—both in government and opposition—suggesting they’ll use pension funds to build the Tema Motorway,” he said.
“When there’s a change of government, you know what that means. These are serious issues we need to address. We must be clear on whose responsibility it is to invest pension funds. Let’s be very careful.”
Government Reaffirms Commitment
Minister for Labour, Jobs, and Employment, Dr. Rashid Pelpuo, reassured workers of government’s commitment to safeguarding pension funds and maintaining a sustainable pension ecosystem.
“The sustainability of our pension ecosystem is not merely a social goal. It is a strategic pillar for social protection, wealth creation, and long-term economic development,” he said.
“Government acknowledges that the Tier Two Pension Scheme plays an invaluable role by providing a structured mechanism for workers to save towards a sustainable future.”
What’s at Stake?
As concerns mount over the direction and management of pension funds, calls for policy reform and stricter oversight are growing louder. For many Ghanaian workers, this issue goes beyond monthly contributions—it’s about the security of their future.
Source:Lovinghananews.com
