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IMANI Alert: The President Fulfilled a Promise on Pensions but Political Interference in Tiers 2 & 3 Pension Schemes Continue

It is no news to most Ghanaians how political interference and general mismanagement on contributors’ monies have affected SSNIT’s operations of over the years.


It was refreshing to hear President Nana Akufo-Addo say in his state of the nation address, that his government has paid GH¢3.1billion of arrears into Tier 2 pension funds to the custodial accounts of various labour unions’ pension schemes. Leadership of Civil and Local Government Staff Association (CLOGSAG) confirmed same. This significant action is a good first step in sanitizing the pension industry and hopefully should mark the end of the needless six-year gridlock we witnessed between the previous government and labour unions over management of the funds.

However, it seems we will not be breaking with our odious political past, which is, interference in the management of quasi-public and public pension funds. COCOBOD’s Tier 3 Provident Fund, a well-functioning pension scheme (currently worth GHC 400m) which belongs solely to COCOBOD workers is currently being mauled into political subservience by overt requests of the Trusteeship (made up of 2 appointees by COCOBOD’s Management, 7 appointees chosen by COCOBOD’s workers and an Independent Trustee appointed by the other trustees through a competitive selection process) to change service providers to politically preferred ones as well as dilute the Trust by removing the Independent Trustee. Sadly, the National Pensions Regulatory Authority is becoming passively complicit. This is what kept happening under the previous government.

Pension Reforms

The pension reforms that started in 2010 has indeed proven to be one of the most important policy reforms in the 4th Republic. Within a little of five years of actual implementation (though contributions started in January 2010 into the Temporary Pension Fund Account – TPFA – at the Bank of Ghana, service providers and pension schemes were registered and/or licensed in 2012 and afterward), the total assets under the privately managed pension schemes is over GH¢9billion as at the end of 2017. SSNIT with its longevity is still under GH¢13billion. The pension reform, initiated by President J. A. Kuffour and implemented by President Prof. J.E.A. Mills, has been a success by all standards. It’s again a testament to the fact the when, as a people, we put aside the petty partisanship, we can make marked progress in our socio-economic lives. IMANI’s research and advocacy role in facilitating the current pension reforms is known by all.

It was therefore no surprise to many of us when President Nana Akufo-Addo laid a lot of emphasis on the use of pension fund monies to solve our national problems; from the provision of funding for constructing accommodation units – and thereby reducing the housing deficit – to expanding infrastructure in general. Pension funds also provide a cheaper source of funding for government expenditure. This in turn reduces the national bills on servicing expensive foreign debts.

It is no news to most Ghanaians how political interference and general mismanagement on contributors’ monies have affected SSNIT’s operations of over the years.

The difference is in how pension schemes under the reforms are managed.  The reforms empower workers to manage their own tiers 2&3 pension schemes. Employees of various organizations with pension schemes have been nominated by management and staff of their organizations and licensed by the National Pensions Regulatory Authority (NPRA) to run these tiers 2&3 pension schemes. In others words, these privately managed schemes that have led the success so far of the pension reforms are owned and run by workers. It was the whole spirit behind the pension reforms and it’s a delight to see it work.

Special mention must be made of the fact that most of the successes we have seen in the reforms are coming from the private sector. Pension funds of private and quasi-private companies like AGC, Ecobank, MTN, Unilever Ghana, Nestlé, GGBL, GPHA, Tullow etc. are those leading the success. Pension funds for employees on direct Government of Ghana payroll are sadly lagging behind. Among other reasons, whilst accrued balances on tier 2 contributions that were previously locked up with the Bank of Ghana (the TPFA) were refunded to some of the pension funds for private sector employees as far back a 2015 and early 2016, government employees only recently got some of those refunds. The good news is that even these public-sector employees have a choice in who manages their funds. It is progress. And we applaud it.

Threats to Progress

Sadly, there is an ugly and a very familiar threat that may soon change the successes that have been made, especially in the public and quasi-public space. It has come to our attention that some “big people” in the current government have started forcing their preferred service providers on the various Boards of Trustees. This is a very recent phenomenon and must be stopped now, and with all seriousness. These government ministers in blatant disregard for provisions of the pensions law, are literally asking licensed individual trustees (who are employees of those quasi-public institutions concerned) to appoint specific companies as fund managers and corporate trustees. Signals have been picked that the day-jobs (not the trusteeship) for these public/quasi-public employees who have resisted (in their capacities are trustees) these named political figures, have been threatened.

Simply put, these government ministers are using their public positions to further their personal and financial interests at the detriment of public sector workers. We also believe that this is happening at the blind side of the Presidency.

At this point, it is important for the Presidency to resist vehemently this attempted neo-corruption. Tiers 2 & 3 pension schemes belong wholly to workers. The President’s attention is being called to these activities so the ministers involved will desist from these acts.  It will be good if the Presidency turns its attention to COCOBOD first. IMANI fought so hard for the country to have a decent pension industry. We need not let it all fall apart again.


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