By Kingsley Webora TANKEH
The Chief Executive Officer-National Pensions Regulatory Authority, Christopher Boadi-Mensah, has called on fund managers to diversify thier portfolios to reduce risks and maximise returns for national development.
“The effective management of pension funds not only determines the quality of life for our retirees but also serves as long-term capital that can be channelled into constructions, housing, green energy and developmental projects,” he said.
“These investments not only provide stable inflationary protection but also create jobs and improve efficiency,” he emphasised.
As governments and many emerging economies grapple with shifting demographics, rising life-expectancy and an expanding informal sector, the conversation around investment and pension management is more urgent than ever.
Considering that a whopping 80 percent of Ghana’s labour force is engaged in the informal economy and untapped – meaning not under any regulated pension scheme – Mr. Boadi-Mensah is asking that funds be broadened to rope-in these workers.
He said denying these hard-working citizens who contribute significantly to the national economy any formal retirement protection “is not just a policy challenge, it is a social justice issue”.
Speaking at The Money Summit 2025 organised by the Business and Financial Times in Accra, the authority said it has developed a micro-pension regulatory framework that reflects the patterns and needs of informal workers to make pension funds in Ghana more inclusive.
This framework allows for daily, weekly or monthly contributions and accommodates both long-term and annuity-based retirement options.
Despite the informal sector presenting an enormous opportunity for fund managers to raise capital for investments, he stressed that integrating it into the pension landscape is not just about numbers. “It is about dignity,” he said, stressing the need for urgent action.
He said the authority is working with stakeholders to design incentive models for the informal sector workers. These include contribution-matching incentives and tax reliefs to encourage broader participation.
To improve accessibility, NPRA is leveraging technology to develop a responsive and reliable dedicated digital platform – the Pension Digital Ecosystem – that will make onboarding and benefit access seamless.
“By integrating it with mobile money platforms and the GhanaCard, contributions will receive real-time updates on their account,” he added.
This level of transparency, according to him, is essential to broadening trust in pension funds… which is the bedrock for long-term commitment.
“Pension funds represent the hard-earned savings of workers across the country,” he noted.
As of June 2024, a total of GH¢78.2billion pension funds was under management. Figures from the Pensions Digest suggest that a whopping 78.34 percent of these assets were allocated to Government of Ghana (GoG) securities, including Treasury bills and bonds.
Weighing-in on the issue of pension investments diversification, Mr. Boadi-Mensah stressed a need to control their exposure to government securities and bonds that carry hidden risks.
Following the unprecedented 2022 Domestic Debt Exchange Programme, DDEP – in which GH¢61.7billion was lost in expected interest payments and extended maturities – there have been calls for alternatives.
Industry experts are however asking for a concrete and workable framework that will ensure transparency in order for investments of these vulnerable pensioners to be protected and made available when needed.
The theme for The Money Summit 2025 – ‘Optimising investment and pensions management: Strategies for sustainable retirement income and economic growth’ – emphasises the exigent need for long-term financial planning, particularly at a time when economic uncertainty has the potential to wipe out investor funds.
More interestingly, the regulatory environment has softened up a little. The National Pensions Regulatory Authority (NPRA) raised the ceiling for alternative investments to 25 percent in 2023, just a year after the infamous DDEP.
However, this still looks meagre in the eyes of industry experts considering the overexposure to government securities and bonds.
“We must recognise that the traditional investment class fund largely dominated by government security is nearing its limit, while savings such as instrumental funds provide a limited return; especially in an era of inflation, volatility and micro-economy uncertainty,” he said.
Pension funds are by nature long-term. Looking beyond the traditional asset class – stocks, bonds and trade remittances – pension funds can be pumped into infrastructure financing, real estate, refinancing, private equity, renewable energy, water systems, rail, digital connectivity, agriculture commerce and social housing.
Diversification of pension fund portfolios creates opportunities to ably manage long-term risk, while aligning pension investment with national development priorities.
