Pension law whets appetite

By Dominick Andoh and Bernard Yaw Ashiadey

The new pension law, the National Pension Act 2008 (Act 766), has precipitated interest in investment advisory services, the Securities and Exchange Commission has disclosed.

Since the law’s promulgation in December 2008 and the subsequent take-off of the scheme in January 2010, 56 licences have been issued with more pending.

This is closely followed by 24 licences issued for broker dealers, with one pending.

The Director General of the Securities and Exchange Commission, Mr. Adu Anane Antwi, in an interview with B&FT in Accra cited establishment of the pension fund under the new pension law as the main reason for the upsurge in advisory services.

The first tier of the three-tier pension scheme consists of a mandatory basic national Social Security Scheme, partially funded, which is compulsory for all contributors. This will be administered by SSNIT.

The second tier is a mandatory fully-funded and privately managed occupational pension scheme. Each contributor will be paid a lump-sum on retirement by the selected private fund manager.

The third tier is also a voluntary, fully-funded and privately managed provident fund and personal pension scheme. Each contributor under the third tier will either be paid a lump-sum or monthly pension depending on choice at retirement by the chosen private fund manager.

Mr. Anane said licenced investment advisors will therefore be in pole-position to manage private funds.

He the further added that the securities market in Ghana is beset with a number of problems, including the effort of liquidation and the small number of companies listed on the Ghana Stock Exchange (GSE).

Mr. Anane disclosed the securities law, which is under review, will seek to separate fund managers from investment advisors.

“We want to make sure that we have fund managers who will be regulated differently with different tools, different from investment advisors,” he said.

The reforms, when passed, are expected to ensure transparency in the securities market and will be of much benefit to companies that are listed on the GSE.