A strong pensions industry is needed to build a large portfolio of long term funds for the capital market, Adu Anane- Antwi, Director General of the Securities and Exchange Commission (SEC) has said.

“Pension business is good for the capital market. Pension and insurance are key players in the provision of long term funds. They have long term funds which can be channeled through the market into long-term investments,” he said.

He indicated that with a strong pension industry there is likely to be over subscription in both government and private bonds.

Mr. Anane Antwi told the B&FT on the sidelines of the launch of the HFC Bank Custody Services to officially outdoor the company’s custody services to the public.

“The use of a custodian promotes best industry standards, allows fund managers and trustees to concentrate on their expertise of investment management, and reduces risks on the part of the investor or his trustee or fund manager,” Augustine Kwakye-Agyekum, Advisor, HFC Bank Custody Services, said.

“Clients assets are separated from those of the HFC Bank. When it comes to service management, our promise is a 24-hour turnaround response time, otherwise we will provide a holding reply and regular update until an issue is resolved.”

Elias Augustine Dey, Manager, Custody Operations said the company has acquired a state-of-the-art Custody 2000 (C2K) software to facilitate its operation. “HFC as a licensed custodian has established processes and controls in place to ensure efficient trade processing and settlement of transactions.”

The HFC was licensed as a custodian by the Securities and Exchange Commission this year and registered by the National Pensions Regulatory Authority to offer custodial services pursuant to the National Pensions Act 2008 (ACT 766).

An initial amount of GH¢270 million has been made available to the pension fund managers by the National Pension Regulatory Authority (NPRA) to begin their operation.

With the approval, companies and institutions and individuals will have the opportunity to choose which of the companies is best suited to manage the contributions of their employees.

So far, about 45 institutions has been licensed by the NPRA; 29 are to operate as corporate pension fund managers, nine as corporate trustees, while seven will serve as pension fund custodians.

The new Pensions Law caters for the establishment of a contributory three- tier pension scheme with a Pensions Regulatory Authority to oversee the administration and management of the composite scheme.

Since January 2010, when the new Pension Act came into force, companies have made a mandatory 18.5 percent contribution to both Tier-1 and Tier-2 schemes.

These payments have been made to the Social Security and National Insurance Trust (SSNIT), although the five percent of the contribution paid into the Tier-2 funds are being held in trust at the Bank of Ghana.

According to the Pensions Act, the pension funds must be released from the Bank of Ghana to the custodians within 90 days of licencing.

The new contributory three-tier pension scheme comprises two mandatory schemes and a voluntary scheme. The first tier of the scheme is mandatory and it covers workers basic national social security needs under the management of state-owned SSNIT.

The second tier occupational pension scheme is mandatory for all employees, but is privately managed and designed primarily to give contributors higher lump-sum benefits than is presently available under the SSNIT pension scheme.

The third tier voluntary provident fund and personal pension scheme is supported by tax benefit incentives to provide additional funds for workers who want to make voluntary contributions to enhance their pension benefits, and also for workers in the informal sector who are not catered for by the first two mandatory schemes.

It is envisaged that the new three-tier pension scheme will enhance pension benefits and increase the retirement income security of workers both in the formal and informal sectors.