4 December 2012

Ghana: Scandal Rocks Pension Scheme

Despite the assurances given by the National Pensions Regulatory Authority (NPRA) that monies it has collected under the second tier of the National Pension Scheme have been invested at the current Treasury Bill rate as the benchmark, evidence emerging points to the contrary.

A statement of accounts released by the NPRA, and copied to individual contributors, indicates that interest per annum made is less than 3%, which is far below the current Treasury Bill rate.

Imani Ghana, a local think tank which has been at the forefront of the battle against the wrong investment being made with the workers contributions, has described the latest revelation as pure robbery, and called for proper investigations into the way the second tier of the pension scheme was being managed.

According to the think tank, they estimate that over GH¢300 million of the workers contributions has not been accounted for, based on the latest revelation.

Following the implementation of the National Pensions Act 2008 (Act 766), in January 2010, the National Pensions Regulatory Authority (NPRA) directed all employers to pay 5% of the Tier 2 contributions into a temporary pension account designed by the NPRA, to be managed by the Bank of Ghana.

The decision was taken because the fund managers who were to administer the funds had not been selected. The delay in the selection of the fund managers attracted the fury of Mr. Franklin Cudjoe, founding member of Imani, who alleged that over GH¢200 million of workers money could not be accounted for, and that the absence of the fund managers had defeated the purpose for which the pension scheme was set up.

The NPRA, however, put up a spirited defence that no money had gone missing, as was alleged by Imani, and that funds, which were collected by the Social Security and National Insurance Trust (SSNIT) on behalf of the NPRA, had been invested at the current Treasury Bill rate.

The NPRA also catalogued a number of factors which they say contributed to the delay in the selection of the fund managers, who, per the Pension Act, are mandated to manage the funds on behalf of the contributing workers.

Meanwhile, after that hullabaloo, the NPRA has begun the process to select the fund managers, but the financial statements it has released, regarding the gains made on the investment it made using the Treasury bill rate as a benchmark, has raised an eyebrows.

Some of the statements of accounts sighted by The Chronicle clearly revealed that less than 3% of interest was made by workers, between the period of January 2010 and June 2012.

"Average interest on the Government of Ghana Treasury bill rates over the past three years is about 15% per annum (having moved between 9.7 and 23% over the period). Giving the NPRA the benefit of doubt, considering that they are not trained and/or skilled Fund Managers, one would expect to see something like 10% per annum return on investments, anything less than that is robbery. Less than 3% per annum, as is the case now, per the NPRA's own issued provisional benefit statement, is criminal. If this is not the smoking gun, we do not know what else is," Franklin Cudjoe told The Chronicle in an interview yesterday.

Cudjoe contended that the amount of workers money suspected to be missing or not accounted for, is well over GH¢300 million. "This is a SCANDAL, anyway one looks at it, and whoever looks at it. That none of our political leaders has had the courage to talk about the botched transition in the pensions reform is very disappointing, to say the least. In any other environment, with some semblance of accountability, an immediate audit would have been ordered into the activities of the NPRA, given the amounts involved and the fact the it is people's pensions. No! Not our country," he a

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