The National Pensions Regulatory Authority (NPRA) has called on the Social Security and National Insurance Trust (SSNIT) to urgently deepen governance reforms and diversify its investment portfolio to shield pension funds from future economic crises.

This follows the massive blow dealt to the financial sector by the government’s Domestic Debt Exchange Programme (DDEP), which exposed the fragility of relying heavily on fixed-income investments. The DDEP is estimated to have cost the financial sector a staggering GH¢61.7 billion.

The NPRA’s cautionary message comes in the wake of ongoing efforts by SSNIT to stabilize its operations and reassure contributors and pensioners of its financial viability. According to Victor Azuma Mejida, Deputy Chief Executive of the NPRA, the episode should serve as a wake-up call for a comprehensive rethink of SSNIT’s risk management approach.

Learning from the DDEP Crisis

Mr. Mejida emphasized that the DDEP significantly disrupted expected returns from investments that were previously considered safe. “The DDEP served as a powerful reminder that even traditionally safe investments carry risk,” he warned. SSNIT’s heavy exposure to government bonds made it particularly vulnerable during the DDEP, undermining the returns needed to meet its pension obligations.

He further noted that the programme exposed systemic weaknesses not only within the Trust but also across the broader financial sector. “Events such as the COVID-19 pandemic and the DDEP have shown how vulnerable our financial systems can be to external shocks. This must not be ignored,” he stressed.

The NPRA is urging SSNIT to take immediate steps to strengthen its internal governance mechanisms. Mejida called for more agility and resilience in how SSNIT operates and makes investment decisions. “SSNIT must take steps to strengthen governance, diversify its investment portfolio, embrace innovation, and boost operational efficiency,” he said.

Investment diversification is central to this recommendation. SSNIT has historically invested a significant portion of its portfolio in government securities, real estate, and a few private equity ventures. The NPRA wants a broader spread across asset classes, including infrastructure, technology, green finance, and foreign equities, to better manage risk and boost returns over the long term.

Pushing for Long-Term Sustainability

According to Mejida, the core mandate of SSNIT—providing retirement income security to Ghanaian workers—demands a structure that can withstand both domestic and global economic turbulence. “We must ensure that regardless of economic pressures or fiscal turbulence, our pension systems can fulfil their commitment to contributors and retirees,” he stated.

This means SSNIT must not only modernize its investment strategy but also develop robust risk management frameworks and succession planning mechanisms that are less vulnerable to political interference or single-sector shocks.

While sounding the alarm, the NPRA also acknowledged SSNIT’s recent efforts to expand pension coverage and enhance administrative efficiency. These include digitizing member records, simplifying claim processes, and introducing customer service reforms. Mejida praised these improvements but stressed that they must be complemented by a much stronger financial and investment base.

“The Trust has made commendable strides in expanding coverage and improving administrative efficiency. But these achievements will mean little if the fund’s sustainability remains in doubt due to poor investment practices or weak governance.”
Victor Azuma Mejida

With over two million active contributors depending on SSNIT for future income security, the urgency of reforms cannot be overstated.