The National Pensions and Regulatory Authority (NPRA) is in discussion with its sector ministry and other stakeholders on the possibility of reducing the fees and charges of trustees who will like to operate in the informal sector.
This is expected to encourage more trustees to enter the informal sector and rope in more informal sector workers into the pension’s scheme.
The Deputy Chief Executive Officer (CEO) of the NPRA, Mr David Tetteh-Amey Abbey, told the Graphic Business in Accra that the planned discretionary fees for trustees was also part of its efforts to focus more on the informal sector this year.
“The NPRA’s focus for this year will be on the informal sector and we are working with our development partners to crack the sector,” he stated.
He said; “There are times we talk about the informal sector and we don’t even know who they are, so we are working with the development partners to be able to have a research on the informal sector and know the kind of products to develop for them.”
Mr Abbey believes this will enable the informal sector worker who does not earn a salary to also enjoy the pensions by having a savings account and a retirement account.
The passage of the National Pensions Act, 2008, Act 766 allowed for both the formal and informal sectors to have the opportunity to contribute towards a social insurance.
Eight years after the passage of this law and the subsequent implementation of the new three-tier pension which had a special provision to include workers in the informal sector, who form about 80 per cent of the country’s workforce, the response from the sector has not been the best, according to Mr Abbey.
The Deputy CEO, however, pointed out that there were already existing products on the market that had been targeted at the informal sector, with a lot of entities also approaching the NPRA for licences to roll out various products for the sector.
He said this was encouraging, but urged more trustees to target the sector.
“It’s expensive to operate in that sector though because of logistics and administration, and that is why we are trying to review the fees and charges to motivate them,” he noted.
Lack of awareness
The Executive Director of Delta Capital, Mr Samuel Asiedu, also in an interview with the Graphic Business, said the low patronage of the informal sector was due to the lack of education on the part of the industry players and the regulator.
He said only a few people in the informal sector were even aware there were pension products available for them; and urged all stakeholders to increase the awareness campaign in order to rope in more workers from the sector.
Mr Asiedu also pointed out that Delta Capital was currently in discussions with a group of workers to come up with a pension’s scheme for them.
“We want to put all the groups together, form one scheme, register it with the NPRA and get a trustee and a custodian bank to then work to manage the scheme,” he pointed out.
He said the challenge so far had been the nature of the sector, which was not well organised, and the fluctuating level of income for some of them.
“The income generation of some of them is not well determined, which is a limitation. Today he gets GH¢50, tomorrow he is not well, the following day he gets GH¢30, and the following day GH¢20. This makes it very difficult to determine the contribution they can make,” he said.
He was, however, confident that the company would be able to iron out all these constraints in order to roll out the scheme by the end of 2017.
Enough in the formal sector
The Managing Director (MD) of FirstBanc Financial Services, Mr Amenyo Setordzie, also said the industry had done enough for the formal sector and it was now time to concentrate on the informal sector.
“We have done enough in the formal sector and it’s about time we assist the informal sector. We need to hammer on the need to attach importance to the informal sector,” he stated.
He said it was an area that FirstBanc was seriously looking at, as it had engaged a number of corporate trustees on it.
He believed the corporate trustees were the ones who should take the lead in terms of penetrating into the informal sector, and then “we will help in terms of fund management to get as high interests as possible.”
The MD pointed out that despite the difficulty in that area, the trustees could penetrate into it if the right IT solutions were used.