¢2TR PENSION CASH MISSING … IMANI threatens court action
By Emmanuel Akli
Following the hullabaloo surrounding the management of workers’ contributions to Social Security and National Insurance Trust (SSNIT), the government enacted the National Pension Act, 2008, Act 766, to create a united pension under a three-tier pension structure.
Under the new law, 13.5% of a worker’s contribution would go to SSNIT as the first tier, 5% as second tier would go to Trustees approved by the government, and the third tier which is a voluntary one.
Information pieced together by The Chronicle indicates that whilst the 13.5% contribution to SSNIT is being properly administered, the operation of the second tier has been decked with suspected corruption.
Besides breaching portions of the Act that set up the fund by the National Pension Regulatory Authority (NPRA), an estimated amount of GH¢208 million (about two trillion old cedis) has also not been accounted for by the managers of the fund.
The Chronicle gathered that the immediate past Acting Chief Executive Officer of the NPRA, Dr. Daniel K. Seddoh, who tried to introduce reform into the operations of the fund by making sure all structures were in place, was frustrated by the Board, compelling him to resign in May, this year. (Read his resignation letter on page 14).
Section 218(1) of Act 766, for instance, says that before the licensing of service providers (i.e. Pension Fund Managers, Pension Fund Custodians and Trustees), employers would be the ones who shall open a Temporary Occupational Pension Account with the Bank of Ghana, for the purpose of contributing the Compulsory Tier 2 (5%) of their employees.
Regrettably, this provision has been breached, as the NPRA has arrogated to itself the role to open and operate the Temporary Pension Fund (TPF) account with the Bank of Ghana, instead of employers. The NPRA has also acted ultra-vires its mandate by acting as Trustee and Investment advisor for the Temporary Pension Fund.
Section 218(4) of the same Act also mandates the Board of NPRA to within 90 days license Pension Fund Managers, Pension Fund Custodians and Trustees, compute and transfer the accrued contributions and returns in the TPF to Occupational Pension Funds opened by Trustees of employers’ choice and registered by NPRA.
Pension Fund Managers, Pension Fund Custodians and Trustees have been licensed since March 16 2011, yet this provision in the above section has not been respected.
Section 131(1) says that Board of NPRA shall consider an application for registration of Pension Schemes made by Trustees, and take a final decision within 90 days of receipt of such applications.
Obviously, this provision, The Chronicle gathered, has not been respected, as applications for the registration of many schemes have been filed with and received by the NPRA for over six months, without a decision made by the NPRA and communicated to the Trustees. To rub salt into injury, the money collected so far on behalf of the contributing workers have not been properly accounted for the past three years.
Though the Acting Chief Executive of the NPRA, Mr. Sam Pee Yalley, recently told the media that the workers’ contributions was intact, and that they should not panic over suspected foul play in the sector, a pressure group, Imani Ghana, thinks otherwise, insisting that, per their calculation, over GH¢208 million of the workers cash has not been accounted for.
Mr. Franklin Cudjoe, founding President of Imani Centre for Policy and Education, told The Chronicle in an interview that a SSNIT audited account they had sighted, which was also published on their website, indicates that the Trust collected GH¢576.8 million in respect of the 13.5% Tier One contributions for 2010 alone.
Based on this figure from SSNIT, and the fact that 5% of the contribution goes into the second tier, Franklin Cudjoe argues that the amount that should accrue to the second tier fund in 2010 is GH¢213.6 million.
Mr. Sam Pee Yalley, Acting Chief Executive Officer of the NPRA, would however, not accept this figure. In a recent interview he granted Radio Gold, Mr. Yalley insisted that they had since 2009, when the fund came into being, collected a total of GH¢439 million, which has so far yielded an accumulated interest of GH¢25 million. But, Mr. Cudjoe contends that the figures put in the public domain by Sam Pee Yalley could not have been the true reflection of what is on the ground.
“We assume that contributions are being invested at constant interest rate of 9.7% (2010 prevailing rate), though interest rate on 91-day bill has risen to 23% presently. We are also assuming that contributions have remained unchanged from 2010, though it is expected to be more. We assume that contributions have been collected for investment for 32 months, i.e. from January 2010 to August, 2012.
“Using the above assumptions with the Future Value formula (FV) to estimate the value of the Temporary Pension Fund run by the NPRA, our calculations show that a total amount of GH¢569.7 million has been collected from 2010 to date, as opposed to the GH¢439 million suggested by Mr. Sam P. Yalley.
“Interest accrued to the investments is estimated at ¢77.5 million, contrary to the GH¢25 million given by Mr. Sam P. Yalley. The TPF per our calculations will be worth GH¢647 million instead of the GH¢464 million NPRA claims it has. Using simple return on investment (ROI), our calculations shows that a return on investment of 13.6% should have been achieved, but NPRA achieved only 5.69%,” he said.
Cudjoe further told The Chronicle that based on this modest assumption it was clear that serious financial impropriety had gone on at the NPRA. “You will all agree that our assumptions have been rather modest, both in our use of constant contributions at 2010 levels, and constant interest rates at 2010 levels, though interest rates today hover around 23%. Our figures indicate that the NPRA should have received GH¢208 million more in contributions. Why is this less? Is this in arrears? Who are the debtors?” he asked.
“The NPRA should have received GH¢52.5 million more in interest from the investments of funds, even at the lowest interest rate in the past 3 years (9.7% in 2010). What did the NPRA invest in to achieve this abysmal return?” he added.
To help stop the rot, Franklin Cudjoe suggested that pension schemes should be licensed immediately for the licensed trustees to take over the management of new contributions.
The NPRA should also quickly publish a statement of affairs of the TPF detailing full facts on monies collected, investments made, and expenses incurred on a month on month basis.
He also called on the government to undertake a forensic audit into the financial management of the NPRA, as regards the handling of the TPF, and punish those who would be found culpable.
He indicated that the failure of the government to investigate the issue would compel him to resort the law court to help protect the public purse.
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