Endeavour to invest in the 3^rd tier voluntary pension schemes if you want to enjoy the special incentives in the 3-tier Pension scheme, that is the advice to workers in both the formal and informal sectors by Kofi Fynn – the Managing Director of Pensions Service Provider, Petra Trust.

The 1^st and 2^nd tier schemes are patronised more because they are mandatory. But Mr. Fynn says workers need to add the 3^rd tier to benefit from the pre-tax savings provision in the Pensions Law. He explained this to JOY BUSINESS at the launch of his company’s investment product called ‘Savings Booster’.

Most Ghanaians know about the tier 1, which is managed by SSNIT and tier 2 which is a contributory pension just as the tier 3.

However, the tier 3 products which are long-term savings products created under the Pension Act of 2008 (Act 766) is not known by many even though it has enormous benefits.

The most significant advantage of tier 3 he said is that it is tax-beneficial as well, just as Tier 1 and 2 but allows an individual to make contributions into a personal pension scheme without taxes being accessed on that contribution.

“In effect what the government is saying is that if you’re willing to even try to save for the long term we are not going to take taxes from you on that amount. Those taxes can be added to the savings thereby, boosting your returns hence, the name of our product which is ‘Savings Booster,’” he stressed.

He explained that when one makes a savings booster contribution and is from a payroll there are no taxes to it and so the money one  would have paid as tax would then  be added to that savings hence, putting the contributor ahead even before the investment begun. “If you made any other kind of investments what you are going to have to take is money that have already been taxed so for example if you are in the 20 percent tax bracket, and you wanted to invest a 100 Cedis, only 80 Cedis of that will be available for investment because the government takes 20 Cedis as tax, with Savings Booster all 100 can be invested so that even before you begin, you are ahead of other kinds of investment products” emphasized.

The 3^rd tier voluntary pension scheme Mr. Fynn indicated is most secure given that it is regulated by the National Pensions Regulatory Authority and therefore, ensures a very high level of quality in the investments made, and a very high level of discipline that brings about safety to ensure that it is a good product for clients.

So we are talking here about high returns in the product itself, a boost that is coming from the additional tax savings, and proper regulation by the NPRA.

The instruments that we invest in are similar to what other investment vehicles would invest in, except that we are regulated by NPRA hence the quality levels of our investments is very high.