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Business News of Wednesday, 22 June 2016

Source: Myjoyonline.com

Low pension contributions by informal sector worrying

The Managing Director of FirstBanC Financial Services Limited (FirstBanC), Mr. Samuel Annie Asiedu has expressed deep concern over the low level of interest in pension contribution by persons in the informal sector.

He said even though personal pension contributions have been provided for under the National Pensions Act, 2008 (Act 766) following reforms implementation since 2010, patronage by the targeted citizenry has remained disturbingly negligible.

Mr. Asiedu disclosed that in spite of the enormous benefits such as tax deductibility on applicable incomes for contributions in the Act, very few persons in the informal sector have taken advantage to make contributions towards their pensions under the personal pension schemes.

He made this remark when speaking to a cross-section of informal sector workers about the benefits of contributing to personal pension schemes.

The National Pensions Act makes room for self-employed persons, persons not covered by any mandatory pension scheme and all other persons in the informal sector to join and make contributions to a personal pension scheme for their retirement.

The contributions are credited into two separate sub-accounts namely the personal savings account and the retirement account. The savings account can be accessed after every five years whiles proceeds from the retirement account shall be paid on the retirement of the contributor as monthly or quarterly pensions during retirement.

Mr. Asiedu indicated that FirstBanC, the second largest pension fund manager in Ghana as part of its strategic plan to increase its current market share in the pensions industry plans to collaborate with corporate trustees to roll out pension programs for the informal sector.

He added that FirstBanC is ready to partner with interested trustees looking forward to rope in persons in the informal sector into the personal pension scheme.

According to the 2015 Pension Fund Managers rankings published by the National Pensions Regulatory Authority, the total pension funds under the second and third tier schemes is worth over GHC2.2 billion, which FirstBanC manages 13.54%, making it the second market leader in the rankings.

Even though its pensions assets managed saw significant growth, compared to 9.9% market share it controlled in 2014, little came from the informal sector with is worrying.