September 18, 2020

NPRA takes steps to protect pension contributions as COVID exposes threats

The National Pensions Regulatory Authority, NPRA, says the impact of COVID-19 on the pensions industry globally is a reminder to developing countries such as Ghana to institute and implement long-term sustainable plans for the aged.

According to the NPRA, most pension funds have suffered a setback because some of the major financial assets where pension funds were invested witnessed a huge dip in returns due to uncertainties caused by the pandemic.

Like all other sectors, COVID-19 has also hit the pensions industry, reducing the returns of fund managers.

Typically, pension funds are invested in long term instruments due to their nature. In developed economies, pension funds serve as a pool of money to invest in the real sectors to generate returns upon which part is given to pension contributors when they retire.

Even though pension contribution has been generally low in Ghana, there have been attempts by successive governments to encourage the informal sector to join in the contribution.

The impact of COVID-19 on the industry has compelled the NPRA to outline new regulations to protect contributors.

Speaking at the 2nd Virtual Annual Open Forum organized by Axis Pension Trust, the Director in charge of Planning, Research and Evaluation at the NPRA, Ernest Amartey-Vondee, said the regulator is strict on enforcing some recommendations that came up during the three-week partial lockdown to protect pension contributions.

“The COVID-19 has had its effect on the pension industry in Ghana. In response, the following measures were instituted. Corporate trustees were made to initiate business continuity plans. The NPRA put in place a mechanism of how to engage with these regulated entities particularly on matters relating to licensing and registration, report submission, fee payment and others. Also, onsite inspections were put on hold temporarily whereas previous submissions of deadline regulatory reports were relaxed. Also, engagement with service providers were held remotely and a review of the Ghana Revenue Authority Act was done to relax withdrawals of Tier three benefits” he said.

Speaking on the need to enhance corporate governance in the midst of COVID-19, the CEO of Axis Pensions Trust, Afriyie Oware, said with the numerous financial sector challenges, a lot more needs to be done to boost confidence among Ghanaian workers towards pension contributions.

“A lot of people have lost their monies to various financial sector institutions. Some of which are actually regulated so this has heightened the level of anxiety among the investor public. So we believe this event has come as a necessary intervention to keep you closer and to also give you an opportunity of understanding exactly what is happening. As a business, Axis has evolved” he noted.

Source: Business