Business News of Tuesday, 25 July 2017
The National Pensions Regulatory Authority(NPRA) has renewed its call on the government to seriously consider the unification of all pension schemes under the current three-tier pension system.
In an interview with the CEO of NPRA, Mr. Hayford Attah Krufi, he appealed to government, through its cabinet, to present before parliament a bill to amend the current law to make it compulsory for all public sector pension schemes to fall under the three-tier contributory system.
He explained that one of the key recommendations of the Pensions Reform Committee, which was captured under section 213 of the National Pensions Act (Act 766) as amended, was that upon coming into force of the Act, all existing parallel pension schemes, such as the colonial Cap 30 and the University superannuation schemes, would be unified under the three-tier scheme, except that of the Armed Forces.
The National Pensions Regulatory Authority was mandated under Act 766 to unify all pensions within five years from the date the assent on 4th December 2008.
This means that the unification should have been completed in 2014.
The Cap 30 Pension, he explained, is a non-contributory pension scheme instituted in 1950 under the Pensions Ordinance, No 42 of Chapter 30 for civil servants in the service before 1972.
He explained that the Cap 30, which some members of the old public service and security services benefit from, is non-contributory and puts extreme pressure on the national consolidated funds. He said for a large number of personnel to enjoy pensions without contributing also defeats the very purpose of the pension reforms which emphases heavily on a defined contribution formula.
“The worry for us as NPRA being the regulator of pension and advisors to the government is that these schemes are not contributory and therefore they are putting a lot of pressure on the national budget,” he emphasised.
He added that the Cap 30 is not actuarially valued and, therefore, payments are not budgeted for but since it is a contingent liability on the government, it’s continued payment takes away the fiscal space that the government so badly needs.
He, therefore, called on the Authority’s two oversight ministries, Ministry of Employment and Labour Relations and Ministry of Finance, to speak out on this matter in the corridors of power.
He said as advisers to government on pension issues, under the Act, “We are obliged to draw government’s attention to this pension time bomb that must be diffused as soon as practicable”.
Furthermore, he said, the framework for unification is available under section 213 and the proposed amendment and it is left with the political will to operationalise it.
On the existing Ghana Universities Superannuation schemes, he said, the university authorities have made a great deal of efforts to modify them in the form of provident fund with 39% contribution but they need to register those schemes with NPRA and modify existing rules and regulations of the scheme issued by the authority in compliance with the National Pensions Act 2008 (Act 766) as amended.