The 2nd Tier Pension Fund Brouhaha…Fortiz May Have The Answers

The ongoing brouhaha over the management of the Second Tier Pension Funds,appears to be a classic case of trying to bolt the stables after the horses have already left. Public and Private sectors are on an indefinite strike over their Second Tier Pension Funds which the government has been holding for nearly four years now without proper accounting. The monthly contribution is unknown and so also is the investment yield.

However a little recall of the controversial sale of Merchant Bank last year could point in which direction the second tier pension fund may have gone.

Merchant Bank was sold to Fortiz Private Equity under very bizarre circumstances and Fortiz at the time named First Banc and Pension Alliance Trust as their General Administrators and Investment Advisors.

Now that it has become clear that Pension Alliance was appointed by Government to manage the Second Tier Pension Fund, industry players are calling on Pension Alliance Trust and Fortiz tocome clean and help the workers with some answers.

It will be recalled that one of the thorny issues around that Merchant Bank Sale was that Fortiz never showed how they were going to raise the GHC90million with which they were to pay for Merchant Bank.

In the midst of the controversial sale,allegations were made by many financial analysts that funds used by Fortiz for the purchase of Merchant Bank, now rebranded to Universal Merchant Bank were made available to them by the Bank of Ghana via the Temporary Pension Fund Account (TPFA) or the Tier 2 Pension funds, being held at the Central Bank.

The allegations gained serious grounds in view of the fact that one MawuliHedo, a Director of Fortiz, was also a Director at First Banc, the Scheme Administrators of the Temporary Pension Fund Account (TPFA). First Banc was appointed to be the Administrators of the TPFA, with Bank of Ghana serving as the Custodial Bank.

Now, it has come full cycle and the suspicions have gained currency with Mr. Emmanuel Botchwey making it murkier with his dual positions as a Director of Pensions Alliance Trust as well as Fortiz!

Now the question baffling the minds of many Ghanaians is whether or not their Second Tier Pension Fund was used to buy off a bank which was owned by these same workers workers through SSNIT.

In January 2010, the TPFA was set up to provisionally administer the Tier 2 contributions, pending the licensing of Trustees and the registration of the Pension Schemes. Employers from January 2010 remitted 5% (Tier 2 contributions) of their employees’ salaries to the TPFA.

The licensing of Corporate Trustees, Fund Managers and Pension Fund Custodians – purposely established to fully administer the Tiers 2 and 3 schemes — was only done by the National Pensions Regulatory Authority on March 16, 2012.

The NPRA finally, after almost a 3-year wait without much information to workers and service providers, registered Pension Schemes at the end of October 2012. Full implementation under the reforms – Act 766 – thus started in November 2012.

Even though the National Pensions Regulatory Authority indicated that it was going to invest the Temporary Pension Fund Account, which was being administered by First Banc, in Treasury Bills pending the registration of Pension Schemes, provisional statements released by NPRA in October 2012 indicated a return on investment of 2.75% per annum.

That return was seen by many analysts including IMANI Ghana as“disappointing, given that the average Treasury bill returns between January 2010 and October 2012 was around 15% per annum”.

“Besides, the provisional statement issued back then covered a period of 18 months instead of the 34 months period (January 2010 to October 2012) over which contributions had been made into the TPFA. This raises fundamental questions as to what was done with the proceeds from the TPFA administered by a Directors of FORTIZ” IMANI queried.

According to the think tank, one of the serious implications of this situation is that people who were 54 years and younger when implementation started in January 2010 WILL NOT get the full value of their lump-sum benefits, upon retirement at 60.

Thus, all Ghanaian workers – both private sector or public sector workers – who were 54 years old or younger as at January 2010 will not get their full lump-sum benefits from Tier 2 Pension Schemes as NPRA is still holding on to 58 months of workers contributions and accrued benefits.

What is making it worse is that, there is no word from the National Pensions Regulatory Authority as to when these funds will be paid to the contributors or even how it will be paid.

There are too many coincidences in this whole saga and the unforeseen hands behind these institutions are pointing to two overlapping sources which can only be explained by understanding the Merchant Bank Sale.

It is also unclear why one Akwasi Addae Boahene a former member of the SADA Board and who was even asked to refund some huge amounts of money to the Authority for various roles he played in the rot at the Authority, remains a Director of this Pension Alliance Trust?

Other members on the Board of Pensions Alliance Trust are: Mrs. Rosa Kudoadzi, Mrs. Janet Nana Thompson, and Emmanuel Botchwey

We lie in wait for the clarification and the sunshine campaign from them Fortiz.

We shall be back!

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