In a bid to boost informal sector pension participation, the National Pensions Regulatory Authority (NPRA) is set to commence the implementation of an incentive-based approach to pensions.
This follows the approval from the Board of Directors to encourage participation of informal sector workers and services providers in the informal sector schemes.
The information available the Goldstreet Business indicates that the incentives will include the waiving of NPRA fees of 0.33 percent on Net Asset Value for two years to be distributed as 1.49 percent for Trustee fee and 2.33 percent Reduction in total fees. The rationale is to make more funds available for Trustees by increasing their fees and also match up contributions of members by reducing the total fees from 2.5 percent to 2.33 percent.
Another incentive is to fix the pension fund managers and custodians fees to 0.56 percent and 0.28 percent not negotiable. This is aimed at enabling them to have enough funds to effectively perform their assigned roles to ensure prudent management of the funds.
The Authority is expected to reduce the informal sector scheme registration fee from GHc 5,000.00 to GHc 1,000.00, in order to encourage high participation of Corporate Trustees and to maximize the coverage of persons in the informal sector.
To encourage high trustee turnover for schemes which would lead to good governance of the scheme, the Authority will reduce individual trustee informal sector licensing fee from GHc 5,000 to GHc 500.00.
The Authority is also considering the introduction of Switch technology that is expected to provide a common platform for Corporate Trustees to collect contributions from the informal sector contributors. The Authority in collaboration with World Bank has already organized a workshop on it with countries like Mexico and Chile sharing their experiences on how the switch technology has helped them to increase pension coverage in the respective countries.