By: Thomas Nsowah Adjei
Government has assured contributors to the private sector pension also known as the tier-three pension that their funds are secured. They should therefore have confidence in the new scheme and voluntarily contribute to secure their future, when they are no longer active in business.
The Minister of Employment and Labour Relations, Ignatius Baffour Awuah who gave the assurance at an Informal Sector Forum in Kumasi as part of the National Pensions Awareness Week, said the Trustees licensed to manage the fund are charged to ensure the beneficiaries are paid their entitlements when the time is due without delay.
This, he said, will whip up confidence in the new scheme to enable the government to move the private sector participation from the current 4% to about 40% in the near future.
The forum was organized by the National Pension Regulatory Agency, NPRA. The Employment and Labour Relations Minister, Ignatius Baffour Awuah allayed the fears of participants saying their funds are secured.
He said there is also a clear difference between insurance and pension, adding that while premium on insurance is paid to beneficiaries based on risk and other terms of engagement, pension is paid after retirement based on the contributions plus accrued interest.
“What we set out to do is to deepen pension awareness among the populace in this country. Especially with emphasis on informal economy, it is any guarantee income over a period of time. They either have to depend on their own life savings or perhaps remittances from their children and what have you. Sometimes, when these things fail, eventually it becomes difficult for them. So our major preoccupation is that, let’s look at our pension laws, let’s look at the advantages there and try to encourage as many Ghanaians as possible to be on it. We have identified that the area where we have the biggest problem is the informal economy which constitutes about 80% of our working population. Out of this informal economy, only 3% are on one form of pension or the other. So our target is to be able to raise this to a minimum of 40% within the next four years. The education of it is what we have started and we will want to engage the populace, get them to understand issues of pensions and get them to be committed to it’’, he noted.
The Ashanti Regional Manager of the National Pensions Regulatory Authority, NPRA, Alex Owusu Boakye explained that the tier three pension is a voluntary Provident Fund and personal pension scheme, supported by tax incentives, targeting workers in the informal sector.
It is also designed to provide additional funds for formal sector workers, who want to make voluntary contributions to enhance their pension benefits.