The Forum for Public Sector Associations and Unions has asked the Government not to apply a “haircut” to Tier 2 Pension Funds as part of a “probable” debt restructuring program.
According to the Forum, it has taken note of media reports suggesting that about 94 percent of Tier 2 Pension contributions placed in Government securities might be affected by the said debt restructuring agenda. At a press conference in Accra, Mr. Isaac Bampoe Addo, Chairman of the Forum, noted that any such decision on the Tier 2 Pensions would contravene provisions of the National Pensions Act, 2008.
“If the Government was to pursue the restructuring of Ghana’s debt by touching pension funds, placed in government securities, it would be tantamount to the deceit of benefits envisaged under the Three Tier Pensions Scheme.”
Mr. Isaac Bampoe Addo
Mr Addo noted that following the media reports, the Forum officially wrote to the National Pensions Regulatory Authority (NPRA) for clarification. He disclosed that the NPRA, in its response to the Forum, assured that “there’s no such policy or decision at the moment to restructure Ghana’s debt and as regards the 94 per cent of Tier 2 pension contributions placed in government securities”.
The Decision to Place a Larger Proportion of Tier-2 Funds into Government
Mr. Addo stated that the decision to place a larger proportion of Tier-2 funds into Government Securities was due to the fact Government paid all the Temporary Pension Fund Account (TPFA) at the Bank of Ghana in government securities. He noted that the Occupational Pension Schemes has efficiently grown the Tier-2 Pensions Funds that would allow the schemes to pay “better lump sum” to its contributors on retirement. “Thus, if the government would want to touch these funds, that are privately managed, it would be tantamount to the Government reaping where it has not sown,” he said.
The Forum is made up of nine public sector Unions and Associations, including the Civil and Local Government Staff Association, the Ghana National Association of Teachers; the Ghana Medical Association; the Ghana Registered Nurses’ and Midwives’ Association, and the National Association of Graduate Teachers (NAGRAT). The rest are the Judicial Service Staff Association of Ghana, the Coalition of Concerned Teachers Ghana, and the Ghana Hospitals Pharmacists Association.
The Forum constitutes about 70 percent of the public sector payroll. Ghana’s Pension Scheme is in three tiers. The First Tier is the Basic National Social Security Scheme for all workers in Ghana. It is a defined benefit scheme and mandatory for workers to have 13.5 percent contributions made on their behalf, and managed by SSNIT.
The Second Tier is a defined contributory Occupational Pension Scheme mandatory for workers with a 5 percent contribution made on behalf of members. The contribution is managed privately by approved Trustees. The Third Tier which includes all Provident Funds and all other Pension Funds outside Tiers I and II is a voluntary scheme.
Meanwhile, Section 102 of the Pensions Act states that “the accrued benefits of a member in an occupational pension scheme shall not be attached in execution of a judgment debt or be used as a charge, pledge, and lien or be transferred, assigned or alienated by or on behalf of the member”.
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