body-container-line-1
18.10.2014 Opinion

The Politics Of Ghana’s Pensions Administration & System

By Ernest Boateng
The Politics Of Ghanas Pensions Administration  System
18.10.2014 LISTEN

The Politics of Ghana's pension's administration dates back after independence with our first Government and President Dr. Kwame Nkrumah. The political history of Ghana has always had an effect on our pension's administration in this Country either directly or indirectly. This has contributed immensely to the sorry state of our pensions today. Let me tackle the politics in SSNIT & the 2nd Tier Occupational Pension Scheme.

SOCIAL SECURITY & NATIONAL INSURANCE TRUST (SSNIT)
SSNIT was established by law as a replacement for the CAP 30 pension scheme which dated back to the colonial days. As a body corporate, they were tasked to oversee the administration of the pension funds of all Government & Private Sector employees except Article 71 office holders and members of the Ghana Armed Forces making sure workers enjoy a decent retirement from active service but what are we witnessing today?

Today, workers are craving to be reverted back to the CAP 30 Pension scheme because it rewards far better than the SSNIT scheme. So why would a post-colonial pension scheme be rewarding retired employees far lesser than a colonial scheme such as CAP 30? The answer is simple. Politics. Pensions in Ghana remain under strict Governmental control leading to the lack of proper accountability and shambolic management over the years. It is common knowledge in Ghana that anything that gets tagged with politics becomes inefficient and heads towards the path of destruction. Government of Ghana has majority representation on the SSNIT Board of Trustees with Organized Labour representatives in the minority.

This definitely places SSNIT in the firm grasps of the Government even though the money SSNIT receives every month comes from the working public's contributions.

Government has always argued that it is dangerous to put the management of pension funds into private hands because the funds could be lost through bad investments and the burden of caring for the Retired Citizenry would come back to Government.

Yes, this is true on one hand but what can we say of the Government controlled SSNIT? Bad investment, Bad Management, Inefficiency, Dissipation of funds, Naked Stealing and the like such that minimum pension of GH¢200.00 in Ghana today is nothing to write home about. SSNIT is exempted from paying any tax on their funds or investment returns but this has still not helped to improve the lot of Ghanaian Pensioners. Why? Politics.

Pension politics has made Ghanaian Retirees after 30-35 years of service to Mother Ghana to seek employment either in the Private Security Services or as Night Watchmen. They simply cannot retire because of inadequate pension gratuity.

Why can't SSNIT be transformed into a Limited Liability Company with the Contributors (Both Active and Retired) as shareholders where they will have the power to elect at Annual General Meeting's (AGMs), Directors and Top Management Personnel of SSNIT? Government can still appoint One or Two Representatives onto the Board for supervisory & due diligence purposes.

This would definitely bring efficiency, accountability and proper management because there would be no job security for any Director or Management member who fails to perform but no way; Government will never support such an idea because it will lose control of the funds which is considered cheap money for Government to fall on when needed.

Today, Government of Ghana has the nerve to borrow from SSNIT to pay public sector workers when the same Government owes the Trust millions of arrears in unpaid contributions. Would this happen if SSNIT was to be in private hands? Your answer is as good as mine.

The current arrangement where SSNIT is accountable to the Public Accounts Committee (PAC) of Parliament says it all because at PAC, its Politics as usual. This is why Mr. Nii A Nablah, General Manager - Finance at SSNIT will dash Sterling Investment Security, a private financial institution a whooping GH¢ 594,000.00 of Contributors money and still be at post as General Manager - Finance as I speak today. This is because SSNIT is for the Government and Contributors (Both Active & Retired) are referred to as Customers. Ok, if Contributors are mere Customers, then why are we not being given the option to either belong to SSNIT or any other pension fund one will choose? Why are we being forced by law to belong to SSNIT whether we like it or not? The answer is pretty obvious.

Section 195 of Act 766 states that any Trustee, Fund Manager, Custodian or Director who misappropriates a 2nd Tier Pension Fund commits an offence & is liable to summary conviction to a fine of an amount 3X the amount embezzled or to a term of imprisonment not less than 10 years or to both. Also a Director or Officer of a Trustee, Fund Manager or Custodian is personally liable for any offence committed under this Act. Why was such a clause missing in part II of the law that sets up SSNIT? The answer is obvious. Politics. If this clause was to be applicable to SSNIT, Mr. Nii A Nablah probably should be languishing in jail by now.

In the recent Merchant Bank takeover by Fortiz Equity Fund, we all saw the brouhaha that ensued between the NDC and NPP with some NPP members pushing for Organized Labour to reject the deal and embark on a strike. Mr. Andrew Awuni of the NPP even went to court to seek to block the deal but was told by the Court he had no locus. If you don't look at what was happening very well, you may think the NPP had the interest of SSNIT Contributors at heart and were therefore fighting for us. That was pure Pension Politics taking place.

Both the NPP and NDC have some of their top guns owing Merchant Bank huge sums of money they took as loans which they have not paid. Amongst those debtors are Engineers and Planners owned by Mr. Mahama Ibrahim, the President's Brother and Mr. Appiah Minkah of Apino soap fame to mention a few. The people behind Fortiz are either NDC or are politically affiliated to the NDC and so the NPP were afraid if Fortiz takes over Merchant Bank, some of their members who owe the Bank will be pursued, hence the brouhaha.

Also the NDC through this takeover will become financially strong either directly or indirectly whiles the NPP will lose control of the Bank even if they happen to come to power in the near future because SSNIT had majority stake in Merchant Bank and so was doing all the top appointments at Merchant Bank.

On the other hand, the NDC wanted to hand over Merchant Bank to its cronies cheaply so that some of its members who owe the Bank including Parliamentarians & Top Businessmen (According to my sources within SSNIT) could go scot free. Is the interest of the Ordinary SSNIT Contributor being considered? The answer is a big No.

As I speak, Merchant Bank has been taken over by Fortiz Equity Fund and re-branded Universal Merchant Bank. *I will later be exposing why most SSNIT Investment into various sectors of the economy went bad and those behind it*.

Government of Ghana owes SSNIT huge sums of money in arrears and by Section 64 of Act 766, a 3% penalty rate should be charged on the sum after 14 days of non-payment but this is not being adhered to. Why? Politics. We were in this Country when Mr. George Aggudey, a former flag bearer of the PNC and owner of GOLDCREST Security was sent to court by SSNIT for non-payment of his workers contribution. Has Government of Ghana ever been dragged to court by SSNIT for non-payment of contributions?

The answer is obvious. Section 64 also states that an Employer who without reasonable excuse fails to pay his contribution, another 3% penalty rate is imposed on the total sum owed for each month of default. Reasonable excuse was not defined by the law and so it is left to the discretion of the SSNIT Director General to determine what constitutes a reasonable excuse.

The National Pensions Act 766 further allows the Director General of SSNIT together with the Board to remit either part / all the money accrued from such penalty imposed for non-payment of contributions. My question is why part and under what circumstance will part of the money be kept by the Director General in connivance with the Board? The law was silent on this. All of these clauses in the Pensions law are politically motivated to siphon money legally and not in the interest of contributors. As a matter of fact, the law allows the President of the Republic to sack anybody on the SSNIT Board through writing. No wonder Representatives of Organized Labour are powerless because although they are there to serve our interest, they end up doing the opposite because of this clause in the law probably.

Pension gratuity is the sole resettlement cash for Public and Private sector employees who are employed under Article 192 of the 1992 Constitution. Our Politician takes their huge ex-gratia and resettlement allowance every four years but Government thought it wise to allocate just 5% of our basic salary every month to take care of our gratuity whiles a whopping 11% of our basic salary has been allocated to SSNIT every month.

So after 30 – 35 years of contributing this 11% every month to SSNIT, all you get is some peanut called monthly pension for 15 years or 180 months. If this is not naked political robbery by Government of our pension funds, then I don't know how else to describe it.

Even after the so called National Pensions Act 766 which sought to bring some reform in our pensions system, Government still controls about 60% of our pension funds through SSNIT and still fighting hard as I speak to seize control of the 27% 2nd Tier Occupational Pension fund which the only fund as Contributors we have some level of control through our Representatives on the Board of Trustees.

To conclude, the Ghana Armed Forces are not part of SSNIT Pension scheme but the representative of the Security Services on the SSNIT Board is Col. James Adamu Koto (Rtd). My question is why would the Police Service, Prisons Service and Immigration Service have a Retired Army Officer with no interest whatsoever about SSNIT to represent them? The answer is for another day.

2ND TIER OCCUPATIONAL PENSION SCHEME
The National Pensions Act 766 was hailed as a breakthrough for Ghana's Pension system reforms by seeking to bring workers or pension contributors directly into the management of their pension. The 2nd Tier pension was therefore seen as a test case of what will become of workers managing their own pension. The National Pension Regulatory Authority (NPRA) issued deadlines for the formation of all 2nd Tier Schemes in order for the accrued money in the Temporary Pension Fund (TPF) Account at the Bank of Ghana (BOG) to be transferred into the various schemes accounts with their Custodial Banks.

The Employers showed no interest in leading the way. This compelled various sector Labour Unions and Associations to put their heads together, employ Consultants to come up with an Occupational Pensions Scheme which were duly registered by the NPRA according to law with scheme Custodians, Administrators and Fund Managers duly chosen.

The Employers feeling left out protested and so the Board of Trustees was amended to include representation from the Employers with the Hon. Minister of Health at the time in the case of the Health Sector Scheme, Miss Hanny Sherry Ayittey inaugurating the Health Sector Occupational Pension Scheme Board of Trustees at the conference room of the Ministry.

According to Section 218 of the Pensions Act, within 90 days of registering any scheme, NPRA should have transferred all accrued contributions (5% of basic salary every month) to the various schemes. This is where the politics started. The Government of Ghana through the Finance Ministry quickly and unilaterally signed a 5 year contract with Pensions Trust Alliance and wrote to all the various sector schemes duly registered by the NPRA that Government (The Presidency) is now very much interested in the management of the 2nd Tier Pension Funds and so Pensions Alliance Trust have been chosen to manage all the 2nd Tier Funds for Government employees. This was both illegal and ridiculous.

It was a major setback for the various schemes as well as the President back tracking in his own words in a speech delivered at the 2014 May Day which read and I quote; “Pensions is your Right and your Responsibility”. Referring to Ghanaian workers in general.

The schemes started digging to find some answers to this latest twist and it came up that Government has used up the money in the TPF Account as I speak in the name of economic challenges and was not in a position to cough it up to the various schemes. Government also started digging to see the various companies which have been selected as Fund Managers, Custodians and Administrators, who are the shareholders of these companies, what is the political affiliation of these people behind these companies?

Definitely, Government thought it was not in his interest to leave such huge pension funds in the hands of people or companies it sees as belonging to the opposition. To Government, this will strengthen the opposition parties either directly or indirectly, give them access to funds in order to prosecute a formidable political campaign to kick it out of power. Definitely, as Labour Unions and Associations, we did not consider these things because it is of no relevance to us. We only want competent hands and brains to manage our pension funds for us and care less whether they are NPP, NDC, PNC or the like but Government thinks otherwise politically. The Labour Unions insist on operating their various registered schemes whiles Government also insist on imposing Pensions Trust Alliance for obvious reasons. The battle line has clearly been drawn.

This is the major reasons why the 2nd Tier Occupational Pensions Scheme has still not become fully operational as I speak. Meanwhile, innocent Contributors who will be retiring as from 1st January, 2015 will have to access their lump sum pension benefit from these schemes. If this tag of war continues, definitely there is a gloomy picture ahead of Retirees come 2015 because SSNIT is no more responsible for paying lump sum benefits to Retirees under Act 766.

Brothers & Sisters, I've said a lot but a lot still needs to be exposed. Let me leave that for another day but the earlier we wrestle the Pension Funds of Ghana from political hands / control and have our destiny in our own hands, the better for all of us and the future of Pensioners. So far as you are employed, you will retire one day. Let's not focus all our attention on the monthly salaries & allowances alone and leave the issue of pensions to the politicians. I bet all of you Readers, they will mismanage it for us as its happening today.

Let's rise up People, for Pensions is our Right and Responsibility!! Long Live Workers of Ghana!! Long Live the Republic of Ghana!! I thank you all.

BADU-BOATENG ERNEST
DEPT. OF CLINICAL MICROBIOLOGY
CLINICAL PARASITOLOGY UNIT
P. O. BOX 1934
KATH - KUMASI.
0244567332 / 0269517126

body-container-line