The Private Sector Federation CEO has criticised the misuse of the Tier-Three pension scheme, saying it was never intended to feed government borrowing but to build capital for business growth.

Nana Osei Bonsu, speaking on JoyNews’ PM Express on Thursday, July 10, said the original architects of Ghana’s pension reforms envisioned Tier-Three as a catalyst for private sector-led development.

“The private sector avenue – actually the Federation – was part of the consortium that developed and sought the three-tier pension scheme,” he revealed.

“What we now have is a three-tier pension scheme, but we’re not accumulating enough capital.”

He stressed that both cost and access to credit remain major constraints for businesses in Ghana.

“Cost of credit is high, access to adequate capital formation is very low,” he said, adding that “capital formation is difficult” in the current environment.

To address this, he said the Federation had proposed to the government that pension participation must be expanded, especially in the third tier, which is voluntary.

“We want full participation, additional people participating, to increase the quantum of resources that go into that,” he said.

But the bigger issue, he explained, is how the funds are being used. “That third tier portion, that quantum should be invested in private sector endeavours,” Nana Osei Bonsu emphasised.

“Private sector endeavours in all the pension schemes and the advisory experts – most of them are investing [in] treasury bills and treasury bonds. That is not the private sector.”

He said this defeats the very purpose of the reform: “That’s not the reason why the third tier was advocated for.”

According to him, if the capital available to the private sector increases, businesses wouldn’t have to chase after expensive loans.

“If the volume of capital available to the private sector is such that you’ll be begging for investment opportunities,” he said, “it definitely will make the rates go down.”

In his view, the state must stop treating pension funds as a convenient source of short-term borrowing and instead channel them toward private enterprises that can generate jobs, taxes, and long-term economic value.