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Draft policy for government to leverage pension funds ready —Finance Minister

A draft policy to help the government to leverage pension funds to address the country’s infrastructural challenges and accelerate growth of the economy has been completed.

The policy, when adopted would ensure that pension funds companies invest more funds in long term infrastructural projects instead of short term instruments.

Mr Ken Ofori-Atta said this in a speech read on his behalf by the Head of Pension and Insurance Unit of the Ministry of Finance, Benjamin Torsah-Klu at the People’s Pension Conference 2019 held in Accra on Tuesday.

The conference was organised by People’s Pension Trust, a subsidiary of People’s Pension Holding based in the Netherlands, on the theme, ‘Private pension fund management-Local standards vis-à-vis international best practices.  What key lessons going forward.’

Mr Ofori-Atta explained that the objective of government was to rely on pension funds to accelerate national development and contribute to the growth of Gross Domestic Products (GDP).

Current contribution of pension funds to the country’s GDP is six per cent and the objective of the government is to increase it to ten per cent in the foreseeable future.

Mr Ofori-Atta said the total pension funds assets as of the end of 2017 stood at GHȻ20.78 billion, representing 32 per cent growth from the previous year, was projected to reach GHȻ25 billion by the end of 2018.

“The strong growth in the pension funds is good news for the economy, given the multiplier effects.  The funds are good source of liquidity for the financial markets, where a chunk is invested in equities and other money market funds,” he said.

He said at the end of the first quarter of 2018, over GHȻ8 billion pension funds under management, with over more than GHȻ4 billion invested in government bonds, and the remaining invested in treasury bills (1.09 per cent), fixed deposits (18.16), corporate bonds (5.41 per cent), mutual funds (1.75 per cent), equity (2.94) and the remaining held in cash.

The Chief Executive Officer of People’s Pension Trust, Samuel Bediako Waterberg said People’s Pension Trust started operations in Ghana in 2014 to help provide retirement income security for people working in the informal sector.

He said currently less than 28,000 of the 10 million informal sector workers had signed on to life insurance and pension fund products and the objective of the conference was to bring stakeholders to discuss strategies to deepen life insurance penetration in the country.

He said his outfit currently has more than 25,000 customers and the target was to increase it to 500,000 by 2022.

Mr Waterberg further indicated People’s Pension Trust, which currently operated in Ghana and Rwanda, was strategising to expand to other four African countries, namely Nigeria, Kenya, and Angola within the next six years.

He said his outfit was collaborating with the Trade Union Congress, Association of Small-Scale Industries and Co-operatives to enroll more people to buy insurance.

The Director of Planning and Research at the National Pensions Regulatory Authority, Ernest Amartey-Vondeen said there were currently 723 individual pension fund trustees, 261 schemes.

He lauded People’s Pension Trust for organising the conference to discuss measures to promote the growth of the pension fund industry.

“I hope this conference will come out with practical ideas to enhance and build a vibrant pension industry in the country,” Mr Amartey-Vondee said.

The Netherlands Ambassador to Ghana, Ron Strikker said the opening of People’s Pension Trust demonstrated the growing bilateral co-operation and friendship between Ghana and Netherlands.

He said the establishment of the company would be a big boost to Ghana’s move to build an economy without aid.

By Kingsley Asare

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