Third-tier pensions failing private sector – Nana Osei Bonsu laments

Ghana’s third‑tier pension scheme—the voluntary, private-sector pillar of the National Pensions Act—is underperforming, particularly for private-sector workers, according to Nana Osei Bonsu, CEO of the Private Enterprise Foundation (PEF).

Speaking on Joy News’ PM Express Business Edition, Nana Osei Bonsu expressed deep concern that private sector employees remain largely excluded from the scheme, undermining its intended impact. He emphasized that while the first two tiers are mandatory for formal workers, uptake in tier three has been disappointingly low.

“This scheme, designed to enhance financial security in retirement, is not living up to expectations,” he observed. “Private sector staff are missing out on the opportunity to safeguard their future.” Reddit+13MyJoyOnline+13MyJoyOnline+13

Bonsu linked the muted adoption partly to broader systemic challenges, including previous economic shocks like the Domestic Debt Exchange Programme (DDEP) that weakened business cash flows—making it harder for both employers and employees to allocate funds toward retirement plans. He noted that high operational costs and limited private-sector profitability further constrain adoption. MyJoyOnline

Although the National Pensions Regulatory Authority (NPRA) has initiated sensitization campaigns—targeting informal traders, artisans, and journalists—tier-three enrollment remains low. In the informal economy, which makes up about 85% of Ghana’s workforce, only 4% actively contribute to any pension scheme. GNA

NPRA has also indicated plans to compel registered private-sector organisations to operate tier‑two schemes, but this enforcement does not yet extend to the voluntary tier three pillar. The Business & Financial Times+6Business World Ghana+6Graphic Online+6

Why Third-Tier Matters

• Filling the retirement savings gap: Tiers one and two alone often fall short in providing adequate income in old age. Tier three offers flexible, additional savings and tax incentives for individuals and employers.

• Protecting informal workers: The tier-three mechanism was designed to include craftsmen, traders, and other self-employed workers—groups historically excluded from pension coverage.

Roadblocks to Uptake

1. Financial constraints: Many private and informal workers prioritize immediate needs over long-term savings.

2. Low awareness: Misconceptions persist that pensions are only for formal employees.

3. Operational inefficiencies: Lack of digital tools, centralized databases, and coordinated enrollment systems hamper ease of contribution.

Nana Osei Bonsu’s Recommendations

• Expand NPRA’s enforcement: Make both second and third-tier contributions mandatory for formal sector workers and incentivize employers through tax breaks or co-contributions.

• Increase public education: Collaborate with media, trade associations, and religious or traditional leaders to broaden understanding of pensions’ benefits.

• Embrace technology: Integrate mobile money and digital platforms to simplify contributions and improve transparency.

• Rebuild economic resilience: Remove systemic barriers—like excessive business costs and debt service squeeze—that limit employers’ capacity to support pension funding.

Conclusion

As Nana Osei Bonsu highlights, Ghana’s three-tier pension system remains incomplete without robust uptake of the voluntary third tier. With a large portion of the workforce left vulnerable in retirement, focused reforms—especially for the private and informal sectors—are urgently needed. The success of tier three is essential not just for individual financial security, but for Ghana’s socio-economic resilience in the long term.