Hayford Attah Krufi, the Chief Executive of the National Pensions Regulatory Authority (NPRA), has disclosed that the government has successfully settled all outstanding pension contributions for both Tier 1 and Tier 2, bringing them up to date as of August 2023.
This payment, as confirmed by Mr. Krufi, was executed in September 2023, following the finalization of the Domestic Debt Exchange Programme. He emphasized that approximately ¢2.3 billion has been disbursed to eliminate these outstanding arrears.
The Bank of Ghana’s 2022 Financial Stability Review report had previously indicated that the government had fallen behind in pension contributions, with arrears accumulating from October 2022 to May 2023.
The report noted, “Government continues to delay in payments of Tiers 1 and 2 contributions. As at June-end 2023, contributions for the period October 2022 to May 2023 were outstanding.” It added that although some payments were received in March 2023, they only covered contributions up to September 2022.
In response to this issue, the NPRA had conveyed its commitment to negotiate with the government to address outstanding contributions and ensure timely payments of future contributions.
The Financial Stability Review report also highlighted the performance of the Basic National Social Security Scheme (BNSSS) managed by the Social Security and National Insurance Trust (SSNIT). As of March 2023, the assets available for BNSSS benefits amounted to ¢13.5 billion, reflecting an 11.6% growth from the ¢12.1 billion recorded in December 2022.
During the same period, total contributions received under BNSSS reached ₵1.5 billion, compared to total benefits paid amounting to GH₵ 1.3 billion. The BNSSS had a negative real rate of return of 26.46 per cent by the end of March 2023.
The NPRA contended that these indicators are expected to improve once the outstanding contribution payments are settled. SSNIT has intensified its compliance activities to expand pension coverage, particularly in the informal sector.
Mr. Krufi emphasized the importance of completing the debt exchange programme to assess the state of government finances in relation to the debt stock. He reassured that efforts are being made to ensure that the government meets its obligations, despite these normal delays.
Regarding payment timelines, Mr. Krufi noted that the law permits government and employers to make payments on the 14th of the subsequent month.
He also mentioned that the NPRA is actively reviewing activities in the pension sector to safeguard the interests of contributors. To this end, the NPRA is implementing the Risk-Based Supervision (RBS) model as part of the SECO phase II project. The RBS aims to automate the NPRA’s monitoring and regulatory functions to enhance data collection efficiency from regulated entities.
Mr. Krufi added that as part of the transitional RBS model, new reporting templates have been developed and issued to the industry since May 2023. Furthermore, the development and automation of a Risk Register for the pensions industry are underway, aiming to identify and mitigate potential risk events before they occur.