The Director of Planning, Research, Monitoring and Evaluation at the National Pensions Regulatory Authority (NPRA), Ernest Amartey-Vondee, has cautioned pension schemes to desist from misleading advertising and similar practices, saying that such measures are bound to derail recent gains in the pensions landscape and further alienate the informal sector.
Sounding the warning, he stated that public confidence in the wider financial services sector remains fragile following recent developments – and the pensions industry is no exception. He therefore called for more emphasis on ethical best practices, which he said will result in deeper levels of financial inclusion.
He offered these thoughts at a ceremony formalising a new partnership between Ecobank and the People’s Pension Trust (PPT), which has particular emphasis on the informal sector – where the former’s digital application and agent banking channels are used to onboard new clients and allow for contributions on behalf of the latter.
Speaking directly about the product, and by extension the broader private pension fraternity, he said: “It is imperative that you provide information about the products directly to existing contributors and potential clients, as well as initiate and pursue continuous education about the product, its features, the requirements for potential contributors, and procedures for making claims on the products and so on.
“Also, you must endeavour to continually train those who sell the products, particularly to avoid misleading prospective clients. This will secure confidence and trust if you are honest with the terms and conditions, especially at the point of sale. You must also simplify the language used to describe the product features,” he explained.
The call comes in the context of gains made by private pension schemes 10 years after their introduction, as they currently account for approximately two-thirds of the GH¢33billion in total assets under management (AUM), as well as the regulator’s goal of ensuring the 11 million workers in the formal sector are roped into pension schemes while increasing coverage in the informal sector from the current 3% to 40% by 2026.
On his part, the Managing Director at Ecobank, Daniel Sackey, stated that the strategic partnership with PPT is consistent with the bank’s twin goals of promoting national development and driving financial inclusion; particularly in the face of the new economic realities occasioned by the ongoing pandemic. The move comes on the back of similar collaborations with other pension firms to provide products such as pension-based mortgage financing.
He is optimistic that Ecobank’s deep roots in digitalisation as well as the ubiquitous presence of its agents will ensure the widest possible reach for the product.
“For us at Ecobank, we have dubbed this year ‘The Year of Partnerships’ because we believe partnerships are crucial to our plans going forward. We speak a lot about the informal sector, but then we need to start delivering concrete measures which target the sector and ensure it grows and enables all of us to realise its benefits,” he remarked.
For the Chief Executive Officer at PPT, Saqib Nazir, economic prosperity must be collective; as such, the informal sector which employs some 70% of the workforce must be catered to. “The segment in Ghana here is part of the 400 to 500 million people in West Africa and the 2 billion people globally who financial services must be extended to… this will undoubtedly have a ripple-effect that will drive improvements across industries and the country’s economy.”