The National Pensions Regulatory Authority (NPRA) says the springing up of digital pension products across various tech-based platforms will drive up pension contributions and penetration, especially in the nation’s informal sector.
“One of the best ways in the collection of pension contributions is the use of financial technology, especially in the regular, normal work setting where salaries are paid at the end of the month through a bank and deductions can be made,” said Hayford Attah Krufi, Chief Executive Officer of the authority, in an interview with Business24 at a day’s training on pensions reporting for journalists.
“As regulators, we are very interested in that because, if you look at the structure of pensions administration, the telcos are not involved, but we believe that MoMo and other mobile-based money networks should be encouraged and used as a means of mobilising pensions revenue,” he added.
The local pensions industry has witnessed a number of digitised micro pension products that are being powered by pension trustees and mobile network companies. These include My Own Pension, a tier-three pension scheme that is powered by telecoms giant MTN.
There is also an industry-first insurance-backed pension product from a partnership between Axis Pensions and Hollard Life Assurance.
Contributions to these schemes are made digitally and directly from subscribers’ mobile money wallets, presenting pensions in an attractive and convenient way.
According to the NPRA boss, the success of mobile money in Ghana has proven that it is possible for the pensions sector to penetrate and tap into the savings of the informal sector.
According to the Bank of Ghana, the total value of mobile money transactions hit GH¢569bn last year.
“If telcos want to be part of the pensions architecture to do the mobilisation, I think it is something that we encourage,” said Mr. Attah Krufi. “What we need to know is the assurance of how the monies that they collect will be held before they get to the custodian. Ultimately, it’s the contributor’s money that we have to be careful about.”
An estimated 7.9m people are employed in Ghana’s informal sector, but most of them are not enrolled in any pension scheme.
The one-day capacity-building event by the NPRA was therefore to equip journalists with knowledge which they can impart to the public to help expand the coverage of pensions and encourage more workers to safe towards their retirement.
The chairman of the National Media Commission, Yaw Boadu-Ayeboafo, tasked media practitioners to provide thorough information that will help the public take the right decisions on pensions.
“As civic educators, the media must commit to excellence in their reportage, especially on pensions-related issues, and also provide adequate time slots for discussions and concerns. The media’s function is to ensure that neither party—the fund managers and the pensioner—loses nor gains unjustifiably,” he said.