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IMANI President writes to the Pensions Regulator: Where is our pension money?
From: Franklin Cudjoe          Published On: September 27, 2013, 01:06 GMT
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IMANI President writes to the Pensions Regulator: Where is our pension money?

Franklin Cudjoe

Dear National Pensions Regulatory Authority,

I have had to cut short my self-imposed break from public advocacy to write this letter. Over the last couple of months I have become overwhelmed and increasingly worried about the number of calls I personally receive from disgruntled workers and retirees about the poor state of their pensions.

I was particularly struck with the following paragraph in one of the letters a middle-aged worker sent to me “The state-owned pension organization ‘SSNIT’ was a Ponzi (419) scheme. We hoped for liberation from outright theft of worker contributions, haphazard and shady investments and sleazy financial reporting only to be in the jaws of a begotten baby crocodile (NPRA) preparing to devour our pension money nyafu nyafu”. "nyafu nyafu" is a local term for petty corruption.

My think tank, IMANI, had many public and private fruitful engagements with the NPRA and we agreed on a timetable for remitting tier-two contributions to legally registered trustees. I have however sought to make this communication public to further the discourse and help Ghanaian workers with information on where we stand with part of their pension money.

It may well be that you are working under very trying conditions, but it seems we need finality to the issue of second-tier contributions three and half years after collection.


In September 2009, the Board of the National Pensions Regulatory Authority (NPRA) was set up to oversee the implementation of the National Pensions Act, 2008 (Act 766). The Act seeks to create a unified pension system under a three tiered pension structure, with SSNIT as the manager of the First Tier, and Approved Trustees (Corporate & Individual Trustees) as operators of the mandatory Tier 2 and Voluntary Tier 3 schemes.

In January 2010, the Temporary Pension Fund Account (TPFA) was set up to provisionally administer Tier 2 contributions pending the licensing of Trustees and the registering of Pension Schemes. Employers, from January 2010, remitted 5% (Tier 2 contributions) of their employees’ salaries to the TPFA. This continued for most employers till October 2012.

In October 2011, the NPRA issued the needed administrative guidelines to make way for the full implementation of the Act. Private companies - Corporate Trustees, Fund Managers and Pension Fund Custodians - purposely established to fully administer the Tiers 2 and 3 schemes were licensed by the NPRA on March 16, 2012.

The NPRA finally, after almost three year’s wait without much information to workers and service providers, registered Pensions Schemes at the end of October 2012. Full implementation under of the reforms - Act 766 - thus started in November 2012.

The Problem

The NPRA did indicate, in their Public Notice on their website in October 2012 that accrued benefits and contributions paid into the TPFA would be remitted to Trustees chosen by employers, starting January 2013. This has not happened up till now.

One of the serious implications of this situation is that people who were 54 years and younger when implementation started in January 2010 risk not getting their lump-sum benefits, upon retirement at 60. This is because over 34 months of their contributions into Tier 2 is still with NPRA. Note that the law exempted contributions for worker who were over 55 years of age when implementation started in January 2010.

What the law says

Section 218(4) says that the Board of NPRA shall within 90 days of licensing Pension Fund Managers, Pension Fund Custodians and Trustees, compute and transfer the accrued contributions and returns in the TPFA to Occupational Pension Funds opened by Trustees of employers’ choice and registered by NPRA. Pension Fund Managers, Pension Fund Custodians and Trustees have been licensed since March 16th 2012, over 18 months now, and yet it took the NPRA till end of October 2012 to register Schemes. The NPRA has not complied with Section 218(4).

How the TPFA has been invested so far

Though NPRA indicated that it was going to invest TPFA in Treasury Bills pending the registration of Pension Schemes, provisional statements released by NPRA in October 2012 indicated a return on investment of 2.75% per annum. This is disappointing given that the average Treasure Bill returns between January 2010 and October 2012 is around 15% per annum. Additionally the same provisional statement covered a period of 18months instead of the 34 months period (January 2010 to October 2012) over which contributions had been made into the TPFA.

Conclusion and recommendation

Given that Pension Schemes have been registered by the NPRA as far back as October 2012, the NPRA should take immediate steps to transfer accrued contributions and benefits to registered schemes and their approved Trustees.

I fully understand the operational challenges the NPRA may have encountered in getting thus far. However, this is no longer funny. The wrong signal is being sent to employers who are yet to sign up to any of the three tiers. All Ghanaian workers should be very interested in this matter as each worker is directly affected. Sooner or later, we will all retire.

Franklin Cudjoe is Founding President and CEO of IMANI. IMANI is a Ghana-based think tank whose mission is simply to subject any government policy that is likely to have systematic implications for development to basic ‘value for money’, ‘due diligence’ and ‘rational choice’, ‘public choice’ and ‘vested interests’ analysis and then actively engage in public advocacy to publicise the results, with a view to promoting peace and prosperity through human flourishing.

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