News Guide Africa

Tag: the National Pensions Regulatory Authority

  • Pensioners alarmed as ILO warns of depleted SSNIT reserves by 2036

    SSNIT

     

     

    Adnan Adams Mohammed

     

    The International Labour Organisation has warned that, the Social Security and National Insurance Trust (SSNIT) faces looming financial crisis, with its reserves projected to dry up by 2036.

     

    This has alarmed many pensioners and active SSNIT contributors in the country.

     

    SSNIT, since its transformation into a Social Insurance Pension Scheme governed by the PNDC law 247 in 1991, is challenged with increasing administrative expenses, which now threaten the sustainability of the scheme. It initially functioned as a Provident Fund, but later expanded its services to include accident, old age, disability, and death coverage, becoming a vital support system for emigration.

     

    Despite serving 1.6 million Ghanaians, roughly 16% of the country’s workforce, SSNIT struggles with rising operational costs, diverting resources from beneficiaries.

     

    The report reveals that from 2008 to 2020, the scheme’s average return on assets was a mere 0.9% after adjusting for inflation, contrasting starkly with the 17.5% average return on Ghana’s 91-Day Treasury Bills over the same period.

     

    Actuarial projections paint a grim picture, indicating that an increase in contribution rates is imperative for the scheme’s longevity.

     

    The PAYE rate, representing the contribution needed to cover all scheme expenditures, is expected to rise from 11.5% in 2020 to 29.5% by 2095, further straining future generations.

     

    Notably, the report highlights that annual contributions alone will not suffice to cover expenditures, necessitating the use of investment income until 2028.

     

    However, by 2029, the scheme will face a deficit, depleting reserves entirely by 2036.

     

    This dire situation underscores the urgent need for government intervention, with the International Labour Organisation recommending increased government contributions to mitigate the risk of reserve depletion.

     

    In summary, SSNIT’s financial woes require immediate action to safeguard the welfare of retirees and ensure the scheme’s sustainability for future generations.

  • GSE, NIC and NPRA to lead local credit rating agency agenda

    The Ministry of Finance has accepted the business plan for the first domestic credit rating agency to be established with key market regulators as shareholders.

    The institutions have already accepted the proposal and working to get the agency established.

    The entities are the National Insurance Commission, the National Pensions Regulatory Authority and the Ghana Stock Exchange (the majority shareholder).

    The move which is backed by the World Bank will improve credibility of corporate bond issuers as well as businesses that participate on the GSE.

    Head of Fixed Income Market at the Ghana Stock Exchange, Augustine Simons, explained to selected Journalists that this is very critical to the promotion of investments on the capital market.

    Early this year, the GSE announced that it will establish a domestic credit rating agency for the capital market in Ghana by the middle of the year.

    The agency is expected to rank bonds according to their value in order to bring some confidence and comfort to investors.

    Giving an update of the work done so far, the Head of the Fixed Income Market said the three market regulators have accepted proposal to hold stake in the agency.

    “Work is progressing steadily and I must say that the three agencies nominated as initial shareholders for the agency, thus, NIC and the GSE have all accepted and made commitments to the establishment”.

    “The business plan developed by accounting and auditing Firm, KPMG, has been accepted by the ministry and they’re supporting it fully to ensure that it becomes successful” he said.

    He added that the requirement by the Securities and Exchange Commission is what could delay the process since it may request a foreign assistance.

    Meanwhile, the Deputy Managing Director of the GSE, Abena Amoah, says the GSE will be using financial literacy programmes to increase the appetite for investments, among citizens.