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Introduction and Background

The National Pensions Regulatory Authority (NPRA) wishes to respond to the issues raised in the ongoing public discussions on the National Pension Scheme – its genesis, goals and objectives and implications for pensioners and the nation -- and the corresponding performance of the National Pensions Regulatory Authority (NPRA).

The Authority wishes to acknowledge that there have been a number of challenges – as would be the case for any such new venture of this magnitude. Undoubtedly, there have been difficulties associated with the introduction of reforms and teething problems, as for any new establishment. In addition, there have been some resource constraints, but this has not unduly hampered the activities of the Authority. Nevertheless, the NPRA wishes to assure Ghanaians that the Pension Scheme is in safe hands and well on its way to achieving the goals and objectives set out for it. To buttress this claim, we would like to set the record straight and correct the factual errors and misrepresentations that have been made to the general public in recent reports, discussions, lectures, alerts, etc.

The Authority would like to emphasize that, as part of its obligations to the nation, it is continuously open to suggestions and proposals to improve the National Pension Scheme. It welcomes constructive critiquing and criticism of its work. While it may disagree with some of the specific views and opinions proffered, it believes that all the discussions, if the motives and intentions of the principal actors are good, should help to strengthen the Scheme and Ghanaians would be better off for it.

First, the NPRA has taken notice of the following that may have formed the basis for much of the recent discourse:

  1. Graphic Business’ publication on 25th September 2012 (captioned “New Pension Scheme under threat”);
  2. Mr. Franklin Cudjoe of IMANI Ghana’s comments and conclusions drawn on the NPRA, as he delivered a speech on “The future of democracy in Ghana” at the recent Third Freedom lectures on 26th September 2012; and
  3. The IMANI ALERT titled “Ghana’s new Pension Scheme on one man’s shoulder” dated 3rd October 2012.

All the above, while well-intentioned to educate and inform the public on such a critical area as National Pensions, appear to have made important material factual errors, misstatements, misrepresentations and unclear conclusions.

A special emphasis is on the Graphic Business report that appears to have triggered the subsequent developments. While recognizing and fully supporting the importance of press independence, we are, nevertheless, disappointed that the report was based solely on what the Paper described as complaints and grievances from interviews with some anonymous trustees “in waiting” who may not represent the majority.  We are similarly disappointed that Mr. Franklin Cudjoe of IMANI, a research organization appears to have also relied on the Graphic Business report without the necessary independent verification as to the facts on NPRA and the basis for certain actions.

NPRA also notes that the resignation letter of its former Ag. CEO, Dr. Daniel Seddoh, dated 20th January 2012, and officially submitted on 22nd February 2012 has been extensively quoted in the current IMANI alert.  It may interest the public to know that, Dr. Seddoh served as a Board Member and Chairman of the Finance and Administration Committee of the Authority for 18 months; as Ag. CEO for 13 months (a total of 31 months).  He took his leave for about 1½ months and finally left the Authority on 30th April 2012.   He is now listed on the IMANI (Ghana) Ltd website as a Member of its Advisory Board. We believe that he may well have also been a source of the information that helped to form the conclusions reached by IMANI. We are saddened that he could not help to provide much more dispassionate statement of the facts, even if he may have been in disagreement with some of the decisions taken by the Authority.

To keep the discussion constructive, we would like to remind all of a statement from the website of IMANI:

“Ideas, they say, are everywhere but knowledge is rare. An authentication process is needed in order to certify that ideas put forward do not breed unintended consequences. The world has learned rather painfully through two world wars how bad ideas ended freedom in the free world. Many western countries have since labored to build stronger institutions that promoted progress”….. by Mr. Franklin Cudjoe to IMANI’s friends.

The NPRA, as part of its contribution to a constructive national discussion on the National Pension Scheme, would like to correct a number of misstated facts and wrong impressions that might have resulted. We do this by first outlining the essence of the National Pension Scheme, the corresponding Governance structure -- the Board, Management and their roles – and Operations of NPRA. Then we briefly review the Progress to Date and finally, make some concluding remarks.  We shall address the Going Forward matters after our response to the issues in the public domain.

The National Pension Scheme and the Governance and Operations of NPRA

The contributory three-tier pension scheme which is the focus of NPRA consists of:

  1. A mandatory Basic National Social Security Scheme,
  2. A mandatory fully funded and Privately Managed Occupational Pension Scheme, and
  3. A voluntary, fully funded and Privately Managed Provident Fund and Personal Pension Scheme.

The object of the scheme is threefold, to:

  1. Provide pension benefits to ensure retirement income security for workers,
  2. Ensure that every worker receives retirement and related benefits as and when due, and
  3. Establish a uniform set of rules, regulations and standards for the administration and payment of retirement and related benefits for workers in the public and private sectors.

To execute the object of the scheme, NPRA was established in August 2009. It is made up of a Governing Board (comprising executive and non-executive members) that oversees the direction and operation of the Authority and a Management Team with day-to-day responsibility. However, as is common at the onset of most new organizations, the Board tends to be more active in the transitional phase. This may have been the case as the organization was being built but this has transitioned as the management team has been strengthened.

After the passage of the Act, the Board was inaugurated and it, in turn, assiduously worked on building a strong organization despite the limitations.

To meet the object, the NPRA has developed a mission to ensure the efficient, effective and equitable development and administration of pensions in Ghana in order to protect the interest of pensioners while advancing the development agenda of the country.

We observe that to satisfy the above object, the functions of the NPRA may be grouped into three (3) classes:

  1. Education and Promotion of Pensions;
  2. Provision and development of Regulations , Guidelines and Procedures to the Pension Industry;
  3. Establishment and Sustenance of a Supporting Organization and Infrastructure to carry out 1 and 2.

Much of the recent discussion has been around the registration of the pension schemes. This has justifiably captured the headlines because of its critical role in the effective functioning of the whole scheme and the investments that various stakeholders have made. Nevertheless, it is important to point out that, though very important, it is only one of many mandates of NPRA. The success of the scheme depends on the appropriate balance of the three classes of functions by NPRA. It may also be noted that the delay to register the Pension Schemes -- another hot button in the discussion -- does not lie with NPRA alone. The NPRA must be responsive to the needs of Corporate Trustees, Public Organizations etc. and some of these stakeholders have made several appeals to extend the periods of registration of the Schemes. The NPRA has always consulted and engaged the various stakeholders any time an extension is granted as a result of requests from stakeholders. These extensions have been widely publicized on the website and as public notices in the newspapers. It may be of interest to note that some of the Corporate Trustees, who have invariably been described as being ready to work, only managed to remedy their defects, made the necessary amendments and resubmitted their applications on 31st August 2012 (Details available on NPRA Website). Thus, it takes a lot of preparatory work to review applications prior to registration of the Schemes.  Notwithstanding, NPRA is firmly committed to deepening the participation of the private sector in the pension industry.

In line with the mission, of prime importance to the Authority is the need to ensure the safety and security of workers’ pensions. The Trustees, legitimately, believe that pension funds should long have been transferred to them as they require the fee incomes to run their operations. Indeed, there has been criticism that it appears that the speed at which we are proceeding has not kept pace with expectations. Much as NPRA sympathizes with the difficulties of these stakeholders, it has to satisfy itself that Contributor’s funds will be safe and secure with the Trustees and their Schemes. NPRA is guided by the experiences of Nigeria, South Africa and Chile and is of the opinion that it is better to proceed cautiously than to rush through with a transfer of funds to Schemes which might not be quite ready.

Finally, we would like to forcefully respond that the Authority’s establishment of the Temporary Pension Fund Account (TPFA) is not an illegality, as claimed in some quarters. Its establishment is supported by section 218 of Act 766, and under the Transitional Arrangements. This was made operational by the Authority issuing the requisite guidelines and code of practice as spelt out in section 208 of Act 766. Indeed, on 10th September 2009, at “a Meet the Press Forum” the NPRA issued, publicized and launched the appropriate guidelines for Transitional Arrangements (Mandatory Schemes, which described in detail how to handle the TPFA).

The involvement of SSNIT in the collection of the 5% contributions was agreed to by all major stakeholders [Ghana Employers Association, Organized Labour, SSNIT and the Pensions Reform Implementation Committee (PRIC)] even before the inauguration of the NPRA Board.

Mr. Cudjoe alarmingly states in one of his public statements; “Second Tier contributions is being managed by NPRA on their behalf in total disregard to the Pensions Act, 2008 (Act 766)" and quotes sections 3(7) and 96(4) of Act 766 to support the illegality claim.  These sub-sections alone do not paint a correct picture and can be misleading. The whole section should be read in order to appreciate the full import, as section 3(7) and section 96(4) only talk about holding the contributions in TRUST until paid as directed.

Mr. Cudjoe’s understanding of these sections and his interpretation are completely wrong.  Section 3(3) does not even allow employers to hold the contributions of workers beyond fourteen (14) days from the end of each month.  With IMANI’s interpretation, every employer will be committing an offence with dire consequences as is clearly spelt out in section 3(10).

Again, IMANI misses the point, very badly, on interpretation of section 96.  Please it should also be read in whole and, not just section 96(4).

There has been a long and arduous process of determining the Past Credits as required by section 94(1)d, but what is important is that whilst the discussions are still ongoing between SSNIT and NPRA, arrangements have been put in place to pay the lump sum based on an agreed formula pending the final determination of the Past Credits.  This is not a simple process, as it demands tact and time to finalize.

IMANI also makes the point that, “if you retired today, you may actually get your 25% lump sum benefit calculated based on your long service to the state, but will terminate at 2009 and potentially lose your second tier contributions from 2010 – 2012”.  This rendition is incorrect.

Progress to Date

There has been a statement to the effect that the Pensions Reform started three (3) years ago; has delayed in implementation; and that by contrast Nigeria took one (1) month to implement.  We would like to draw the public’s attention to the following facts.

  1. The pension reforms actually commenced in 2004. A Pensions Reform Implementation Committee (PRIC) was formed in 2006, the Establishment Act 766 was promulgated into law in December 2008 and a Governing Board inaugurated in August 2009. The three-tier Pension Scheme was launched in September 2009 and actual implementation of the reforms started in January 2010. These facts are all available on the NPRA website (www.npra.gov.gh)
  2. The Board after its inauguration has: worked on and completed the two (2) key Regulations governing Occupational and Personal Pension Schemes and the Basic National Social Security Scheme passed into Law in March 2011; worked on a host of guidelines for each of the three (3) tier scheme (e.g. Guidelines on investment of pension Scheme Funds, Guidelines for registering custodians/Fund Managers and licensing of Trustees etc); set up the operational structures; determined the various fees and relevant charges; hired some staff who have helped to work on the various guidelines for service providers and other market players to guide their licensing and registration; undertaken various educational and publicity programs for stakeholders nationwide; established a web site and a detailed reporting, ICT and information management systems, among others.
  3. The Authority has as at June 2012 approved and licensed 15 Corporate Trustees; 13 Custodian Banks; 31 Fund Managers.  Seven (7) additional Fund Managers/Custodians have recently been approved pending publication of the Public Notice.  Licensing/registering such Service Providers required the Authority to conduct a fit and proper test on all directors and key staff of all applicants (much more than the number approved to date) and that involved working with the Security Agencies.
  4. NPRA currently is scrutinizing over 171 Pension Scheme applications to allow for registration with the NPRA. Most of these are umbrella schemes with multiple sub schemes.  The exercise is almost completed and approvals to be given at the Board meeting on Monday, 15th October 2012.
  5. NPRA has recently supervised the preparation of individual Benefits Statements (which show contributions, investments and gains) for a little over 800,000 contributors to the tier 2 Pensions Scheme for January 2010 to June 2011. These provisional statements will soon be distributed to Contributors to allow for rectification of any errors/omissions.
  6. Work done by the Authority has seen keen interest and participation by international organizations and donor agencies. Countries such as Malawi, Liberia, Tanzania etc. have visited Ghana to learn the best practices that the Authority has managed to implement especially in the face of the difficulties associated with reforms and the teething problems of any new establishment.

IMANI’s First Contact with NPRA

  1. IMANI and Mr. Cudjoe first wrote to NPRA on 11th September 2012 titled: IMANI NEEDS EDUCATION, to solicit information and data. Without following up on their request to NPRA, Mr. Cudjoe was happy to quote verbatim a Graphic Business Report, and issued an “alert” that made vile and denigrated remarks about the NPRA and its Board Chairman, who in the face of avoidable and unnecessary difficulties, have helped the implementation of the Authority’s mandate.  This Alert contains misstatements and represents wrong interpretations and sentiments that Mr. Cudjoe described as in-depth investigations.
  2. Mr. Cudjoe in his letter of 11th September 2012 writes “whilst we commend your effort at deepening private sector participation in the sector, it appears, the much needed speed has not kept pace with expectations.”  How then could he conclude that the NPRA is yet to “lift a finger?”  The NPRA website has details of the key activities undertaken by the Authority, since the inauguration of the Board in August 2009.


The journey that Ghana embarked on to reform pensions was a courageous one. Bringing the erstwhile patchwork of different pensions into a coherent national scheme has been a major but worthwhile undertaking. Ensuring security in retirement has to be one of the top priorities of any modern society. That has been the task assigned to NPRA which was given birth to as a result of a series of activities: Pensions Reform Implementation Committee formed in 2006, the Establishment Act 766 promulgated into law in December 2008, the inauguration of a Governing Board in August 2009, the subsequent and ongoing development of an empowered organization, the launching of the Scheme in September 2009 and the actual implementation of the reforms starting in January 2010.

A lot has been learned and a lot has been achieved. Undoubtedly, some mistakes have also been made. However, it is the intention of the Authority to learn from both the successes and the mistakes so that the pensioner in Ghana for whom all the myriad of activities are intended to support will be the clear beneficiary. To achieve this, it is important that discussion on the National Pension Scheme transcend the traditional divisions in the country. We must all be guided by the spirit of continuous improvement. All the facets of the Ghanaian society – the people, the press, the Legislature, the Executive and the Judiciary – must contribute to this most important national agenda. When that happens, NPRA would become the organization we would all like it to be.

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Over the years, concerns have been raised and agitations made by public servants over inadequacies of the level of pensions to sustain a respectable life for retired public servants. Of particular concern to most workers’ groups has been the low pensions received by workers ... | Readmore