Resignation of CEO of NPRA

NATIONAL
PENSIONS REGULATORY AUTHORITY

Our Ref. No. NPRA/GC/13/12
Date: 20TH January, 2012


H.E
JOHN EVANS ATTA MILLS
PRESIDENT
OF THE REPUBLIC OF GHANA
OFFICE
OF THE PRESIDENT
THE
CASTLE – OSU


Your
Excellency,


RESIGNATION
AS ACTING CHIEF EXECUTIVE OFFICER OF NATIONAL PENSIONS REGULATORY AUTHORITY

I
make reference to a memo from the Board Chairman of National Pensions
Regulatory Authority (which I have attached for ease of reference) titled
‘Comments on conduct of Board by Acting CEO’ dated 15th February,
2012 and received on 17th February, 2012.

It
is common knowledge among Board members that the working relationship between
the Chairman and the Acting Chief Executive Officer has not been cordial and to
the extent that the Board has set up a mediating team to identify the root
cause of the problem and make recommendations to rectify the problem.

From
my position as the Acting Chief Executive Officer, the non-cordial working
relationship is not a personal issue but rather conflicts that are coming out
from corporate governance challenges and differences in the management style of
running the business of the Authority. The memo from the Chairman is purely an
attempt to play the Acting Chief Executive against the Board and Government.
The Board is fully aware of my concerns and frustrations in running the
Authority and these I have raised in one form or the other to Board members.

I
have admitted to the Board previously that I have consulted some eminent people
to discuss my frustrations at the administration of the Authority. I did this
with the best of intentions to get help and highlight the importance of the


Authority
in the national economy. I am pleased to mention that it is one of such
consultations that resulted in the Acting Chief Executive Officer being invited
by the President’s Economic Advisory Council to make a presentation.


The
invitation was honoured by the Board Chairman in the company of the Chief
Executive Officer and one Board Member (Dr T.A. Bediako). We all came out of
the meeting with the feeling that we had a fruitful deliberation at a very high
level and we were anxious to receive a follow-up invitation. If not for
anything, this singular act of meeting the President’s Economic Advisory
Council clearly demonstrates my conviction that government can facilitate the work
of the Authority and dispels the rumour attributed to me that government is not
committed / interested in the Pensions Reforms.

I
have no desire of responding to the issues raised in the Board Chairman’s memo
but for the sake of the records, I wish to use this opportunity to speak to the
issues that I consider in my professional opinion to be the challenges
confronting the Authority and impacting negatively on its day to day
administration. For the sake of emphasis,
I wish to state that the comments and issues discussed below are not personal
but examined purely from a professional perspective.

1. Having
the philosophy of doing first things first.It is people
who get work done and not laws and guidelines. It is for this reason that
recruitment and training of staff should have been the priority of the
Authority. To recruit staff means to put remuneration packages in place and
have it handy for discussion with applicants.

The
Authority interviewed a wide range of applicants some dating back about a year ago,
yet appointments could not be made because compensation packages were not in
place. In my early days in office, the Acting Deputy Chief Executive Officer
and I committed ourselves to developing a compensation package but for some
reason we cannot understand, we did not obtain early support from the Board.
The Chairman subsequently put together a Board Sub-Committee on remuneration
which strangely excluded the Acting Chief Executive Officer and his Deputy from
the Committee’s deliberations. The salary structure is currently with the
Ministry of Finance and Economic Planning awaiting formal approval.

The
training needs of a new organisation like NPRA is enormous and even though
belated, it is desirable that staff be recruited early and passed through training
for the task ahead.



2. Challenges
of Corporate Governance.The Board of the Authority
(non-executives) is a fully constituted one, but unfortunately, at the time of
its constitution, the Executive team was not put in place. It took a while to
introduce the Executives on piece meal basis. This situation created a
challenge for the Board whereby the Board assumed executive powers. With the
introduction of the Acting Chief Executive Officer and a Deputy, it is
desirable that the Board assumes its governance role and relinquish day to day
administrative powers to the Executives.

Micro
managing by the non executive Chairman is amplified in signing cheques and
demanding that all administrative correspondence be copied him. The Board
Chairman ever signed letters to override earlier ones written by the Acting
Chief Executive Officer and prevented the Acting Chief Executive Officer from
attending a World Bank sponsored training programme in Washington DC. The Board
Chairman
bypasses the Acting Chief Executive Officer and his Deputy to instruct and
obtain information from subordinates. This is even extended to third party
service providers who the Chairman engages with in the execution of their
contract.

The
straw that broke the camel’s back in this tumultuous relationship occurred on
10th February, 2012 when the Chairman called a meeting of management
staff, some Board members and third party Fund Administrators without the
knowledge of the Acting Chief Executive Officer. The Acting Chief Executive Officer
was only
informed by the Accountant who could not tell what the agenda of the meeting
was. This meeting was actually a platform used by the Chairman to humiliate the
management of the Authority in the presence of the third party service
providers.

Governance
is a huge challenge for the National Pensions Regulatory Authority and the
earlier the issue is addressed the better it would help the Authority to
deliver on its mandate.

In
my humble view, it is about time the government review governance issues of all
public Boards and provide clear guidelines to ensure that the conflicts and
deviations from good corporate governance practice I have witnessed is not
occurring in other institutions.




3. Accommodation
for the Authority. Although government has paid for a
rented accommodation for the Authority, the staff could not move in immediately
as the initial effort by the Acting Chief Executive Officer to commence the
procurement process for air conditioners and other fittings was thwarted by the
Board Chairman. The Chief Executive Officer’s application letter to the Public
Procurement Authority to obtain approval for restricted tendering was presented
to the Board by the Chairman as an attempt to award contract to suppliers
without Board’s involvement. The Board was of the conviction that they had a
significant role to play in the procurement process. A subsequent letter from
the Public Procurement Authority however confirmed the status of the Chief
Executive Officer as the Chairman of the Entity Tender Committee of the
Authority and this put the issue to rest. The Authority subsequently
recommenced the process and do hope that final approval would be obtained soon.
Currently the Board is demanding that the staff of the Authority should move
into the new premises which have glazed rooms without air conditioners.

4. Temporary
Pension Fund Administration.The Authority
assumed the role of Temporary (5%) Pension Fund Administrators when it has
limited capacity. In order to manage the transitional arrangement, SSNIT was
requested to collect and remit to the Authority payments from contributors
whilst third party service providers were engaged to handle data management.
Due to the configuration of SSNIT’s internal system as managers of Defined
Benefits it was quite obvious that SSNIT would have challenges in collecting
and remitting contributions timeously. Consequently it is becoming onerous to
keep accurate record on contributors’ principal and returns on investment and
ultimately produce statements that would reflect the time value for money.

An
attempt by management to draw attention to the challenge of record keeping in
the Temporary Pension Fund Administration and offer solution was challenged by
the Chairman of the Board. On 30th November, 2011 at a Board meeting
held at Dodowa, the third party service providers were invited to allay the
fears being raised by management on contributors’ statement. Assurances were
given by the service providers that all is well. Unfortunately, however, the
Board Chairman on 10th February, 2012 attacked the management of
NPRA in the presence of these same third party service providers for being the



cause of challenges being experienced in the
production of contributors’ statements.

It
is important that serious efforts are made to reconcile contributors data to
ensure that cash and investment holdings that are under the custody of NPRA in
aggregate is equal to the total
liability due to the contributors before statements are sent out to them. The
caution is that Defined Contribution is fully funded and at any point in time
the contributors’ statement and the funds should be the same.


5. Transitional
Issues with SSNIT.Although there are issues the
Authority has engaged SSNIT on, there are two that are worth mentioning in this
document. First is the past credit as stipulated in Section 94(1) (d) of Act
766 (Accrued or past service or past credit earned by every contributor to whom
the new scheme applies in respect of the 25% lump sum benefit shall have the
lump sum determined by a formula agreed between the Pension Reform
Implementation Committee and the Trust based on actuarial assessment). The
Authority has been at this for far too long and I think this issue is creating
so much anxiety in the system. It is important that an early determination is
made to put this matter to rest.

The
second has to do with the formula for the computation of pensions. It is common
knowledge that there are errors in Section 77 (2) & (3) of Act 766. The
errors are purely arithmetic and one would have expected that correction would
rather be straight forward. The Board’s posture particularly with Section 77(3)
when the Acting Chief Executive Officer made conscious effort to generate
discussions to change the mistake made in an earlier correction was rather
unfortunate. I do understand that there are two schools of thought in the
Boardroom – one being realising the benefits of the pensions reform immediately
and the second being allowing for gestation period before realising the
benefits of the scheme. It is my considered view that it is because people were
not very happy with the SSNIT scheme that is why the reform was introduced.

What
was not working well over a long period cannot be corrected by the stroke of
the pen. There is certainly some work to be done in SSNIT before improved
benefits can accrue. It is for this reason that we cannot



be too generous to the detriment of the
survival of the scheme when we do not correct this error.

6. Licensing
of Corporate Trustees. The Authority is gearing up to
license Corporate Trustees with the assumption that the Temporary Pensions
Funds under the care of the Authority would be transferred to license Corporate
Trustees. Although the Authority is under tremendous pressure to issue
licenses, it is my humble submission that the process be given some critical
thought. Additionally, the desire to license must be balanced with the
development of the appropriate regulatory capacity of the Authority.

7. Contingent
Liabilities of Transitional Provisions– Act 766, Section
213. ‘The following enactments and schemes shall on the commencement of this
Act apply for a transitional period of four years and cease to be in force
after that period.’

a. the Pensions Ordinance No. 42 of 1950
(CAP 30) as amended;
b. Teachers Pension Ordinance 1955 as
amended;
c. Ghana Universities Staff
Superannuation Scheme;
d. Ghana Police Pensions Act, 1985 (PNDCL
126);
e. Public Legal Officers Pensions
Amendment Act 1986 (PNDCL 165);
f. Immigration Service Pensions Act 1986
(PNDCL 226)
g. Prisons Services Pensions Act 1987
(PNDCL 168)
h. Section 34 of the Security and
Intelligence Agencies Act 1996 (Act 526) and
i. Section 27 of the National Fire
Service Act, 2000 (Act 537)

Section
219 (1) “Subject to section 213 of Act 766 the retirement benefits in respect
of accrued or past service earned by an employee shall be computed in
accordance with the terms of conditions of service existing before the
commencement of this Act 766”.

Section
219 (2) states that “Each employee shall be issued with a Ghana Government
Retirement Bond equivalent to the total retirement benefit that was due the
employee as computed at the commencement of Act 766”.

There
is no doubt that Sections 213, 219(1) & (2) impose an onerous task on the
Government. These sections pose real challenge to the national economy and one
would have wished that there was adequate platform to

discuss
with the appropriate government agencies for effective planning and management
of pension liabilities that are crystallising. The President’s Economic
Advisory Council was hinted about this contingent liability.

Your Excellency, there is no doubt in my mind that
the work of the Authority is herculean but with limited resources. There is the
need to make policy determination as to how to fund the activities of the Authority
at its initial stages. There are a number of options to be considered.

· Government funding all the activities
of the Authority
· A combination of Government funding
and limited generation of internal fund through levies
· Government giving seed money to set
the Authority up for the next two years and wean off completely
· The Authority immediately levying
schemes including SSNIT and Temporary Pension Funds aggressively
· Donor support
Whatever
the option chosen, it is important to give the Authority financial muscle to
get its work done efficiently.

Your
Excellency, having said all these, what is most important is the human beings
who work in the organisation and the leadership being offered through the Board
Chairman and the Chief Executive Officer. The deteriorating nature of the
relationship between the Board Chairman and the Acting Chief Executive Officer
is not healthy and poses a great challenge to the development of the Authority.
It is in this light that I have decided to resign my position as the Acting
Chief Executive Officer of the Authority with effect from 1st May,
2012. I will proceed on terminal leave from 16th March, 2012 to 30th April, 2012. I
intend to use the period from now to the time I proceed on leave
to wind down and handover to my Deputy and the Board Chairman.

Your
Excellency, unfortunate as my decision may be, I wish to thank you sincerely
for the opportunity offered me to serve for the past one year. I wish the
Authority, the Board and Staff well in the march to develop the pension industry
in Ghana.

Yours
faithfully,



DR DANIEL K. SEDDOH

ACTING CHIEF EXECUTIVE OFFICER
NATIONAL PENSIONS REGULATORY
AUTHORITY


Cc: H.E. the Vice President of Ghana
Chief of Staff
Secretary to the President
Deputy Chief of Staff – Dr Valarie
Sawyerr
Minister of Finance and Economic
Planning
Minister Responsible for Pensions
Board Chairman – NPRA
Board Members - NPRA