Managing Pension Funds in Ghana: An Overview

Abstract

The concept of planning is implicitly linked to the decisions Ghanaians make in their everyday life activities. The intuition is that people make the choices that they perceive will cater for them in times when they require assistance of some sort. This assertion has given rise to various forms of hedging activities including insurance policies and life time planning packages. Common among the category of packages is the retirement package scheme usually referred to as the Pension Scheme. The Scheme, among other things provides for the needs of Ghanaians at their retirement periods when they are unable to engage in active public service. Despite the indications of selfless support that the scheme presents to the Ghanaian employee, there have been issues of mismanagement, inequitable returns and employee-employer conflicts. Sometimes people contribute for all their active years and only retire with packages below their expectations. This has caught the attention of many unionised bodies into organising various forms of industrial actions to attract the attention of the government and the state. Many argue that there is lack of public knowledge on the composition of the scheme and management of same, adding that there is limited information to employees on how their funds are managed. Others argue that over the years governments in Africa have not demonstrated the astuteness of “a good business person” and therefore call on private investors to manage the funds with the view to generating high returns. Despite these calls, there are limited studies on the Pensions in Ghana. This paper therefore provides an original overview of the Pensions Scheme so that a foundation is built for future reference and research directions.