SECOND TIER: WHERE ARE THE MILLIONS OF THE PENSION FUND

 

Recently, there have been serious allegations that funds used by Fortiz for the purchase of Merchant Bank, now Universal Merchant Bank, were made available to them by the Bank of Ghana via the Temporary Pension Fund Account (TPFA) or the Tier 2 Pension funds, being held at the Central Bank.

 

These allegations have come to light because of the fact that one Mawuli Hedo, a director of Fortiz, was also a director at First Banc, the Scheme Administrators of the Temporary Pension Fund Account.

 

The TPFA was set up in January 2010 to provisionally administer the Tier 2 contributions, pending the licensing of Trustees and the registration of the Pension Schemes. Employers from January 2010 remitted 5% (Tier 2 contributions) of their employees’ salaries to the TPFA, and this continued for most employers until October 2012.

 

However, the licensing of Corporate Trustees, Fund Managers and Pension Fund Custodians – purposely established to fully administer the Tiers 2 and 3 schemes — was only done by the National Pensions Regulatory Authority on March 16, 2012.

 

The NPRA finally, after almost a 3-year wait without much information to workers and service providers, registered Pension Schemes at the end of October 2012. Full implementation under the reforms – Act 766 – thus started in November 2012.

 

Even though the National Pensions Regulatory Authority indicated that it was going to invest the Temporary Pension Fund Account, which was being administered by First Banc, 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 was disappointing, given that the average Treasury bill returns between January 2010 and October 2012 was around 15% per annum. Besides the provisional statement issued back then covered a period of 18 months instead of the 34 months period (January 2010 to October 2012) over which contributions had been made into the TPFA. This raises fundamental questions as to what was done with the proceeds from the TPFA administered by a director of FORTIZ.

 

One of the serious implications of this situation is that people who were 54 years and younger when implementation started in January 2010 WILL NOT get the full value of their lump-sum benefits, upon retirement at 60.

Thus, all Ghanaian workers – both private sector or public sector workers – who were 54 years old or younger as at January 2010 will not get their full lump-sum benefits from Tier 2 Pension Schemes as NPRA is still holding on to 58 months of workers contributions and accrued benefits.

There is no word from the National Pensions Regulatory Authority as to when these funds will be paid to the contributors or even how it will be paid.

 

It is recommended that all activities of the TPFA should be audited by an external auditor and accrued contributions in the TPFA should be transferred into the registered Tier 2 Pension Schemes selected by the various employers.

This would ensure that all workers get their fair share of the contributions and benefits that they have earned over the years. The National Pensions Regulatory Authority should also provide more information to workers and service providers about the status of these funds and when they can expect to receive them.

This is a serious matter that needs to be addressed as soon as possible, in order to ensure that all workers get the benefits they deserve.

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