Conundrum of SSNIT with the Transfer of risks to a strategic Investor and the way forward

The Holy Bible at Hosea 4:6 decreed ‘My people are destroyed from lack of knowledge …...”. So, the hullabaloo surrounding the conundrum which SSNIT has found itself with the attempt to manage her risk in order to ensure the sustainability of the Welfare Fund as well as the maximization of profit of the fund is due to the very poor knowledge about SSNIT and understanding of the relevant laws of Ghana governing SSNIT as a Trustee and matters on conflict of interest or conflict of the law as far as SSNIT attempts to share the risks of some of her assets with a strategic Partner or the transfer of the associated risks of the affected assets to a strategic Partner.

It must be emphasized that SSNIT is a statutory body, established by Parliament as a Trust like a Public Welfare Foundation with the Trustees enjoy full autonomy in decision making like Constitutional Bodies like the EC, CHRAJ, and NCCE etc, in order to ensure the sustainability of the Welfare Fund as well as the maximization of profit of the fund

It must be emphasized that Social Security and National Insurance Trust (SSNIT) is a Statutory Public Trust, with Trustees mandated by an Act of Parliament to administer Ghana’s Basic National Social Security Scheme as required by the National Pension Act 2008 (Act 766), PNDC Law 247 and other relevant laws like the Public Procurement Act 2003 (Act 663) with its amendments as well as relevant Constitutional provisions.

So, it must be appreciated that SSNIT is required to operate in line with the laws of Ghana, especially Act 766, PNDC law 27 and the procurement laws of Ghana and her operation must be based on the relevant provisions of the 1992 Constitution to be based on the Constitutional principle of Probity, Transparency and Accountability as the litmus test for questioning the related matters.

So, the Board of SSNIT, in the attempt to sustain the Fund as well as to ensure reasonable payment of pensions to a retired worker by attracting huge investment and effective management through a strategic partnership for the affected hotels. So according to SSNIT, it has duly complied with the provisions of the Constitution and laws of Ghana in the attempt to transfer parts of the risks of SSNIT to a strategic partner or investor.

Consequently, any different opinion should be tested at the appropriate places or fora established by the 1992 Constitution namely CHRAJ, a competent Court of the Judiciary Arm of Government otherwise in Parliament and not in the gutters of public opinion Court.

So Hon MPs and other elite groups must demo very good Leadership by toning down their fiery of populism and use the various fora as provided by the 1992 Constitution for litmus test questions otherwise support SSNIT to ensure the maximization of the Fund.

The public must understand that the purpose of SSNIT is to run on behalf of the employers of Ghana, repeat employers of Ghana for the interest of their employees with the exception of the Ghana Armed Forces and her personnel, an effective and efficient pension schemes like a very profitable Public Welfare Foundation. Hence, the mission of SSNIT is to provide income security for retired workers of Ghana through excellent business practices.

We need to understand that SSNIT and Fund Managers for the Provident Fund operate under a Regulator which is the National Pension Regulatory Authority, which is also a Statutory Independent body in decision making. Likewise SSNIT is governed by a Tripartite Board with Representatives from the Contributors to SSNIT namely the Ghana Association of Employers, Workers and the Government.

A critical check on the membership of the SSNIT Board will tell that the Workers of Ghana or the beneficiaries of the Fund with the exception of personnel of the Military, really have six representatives on the Board of SSNIT. The six workers Reps is made of four from organized labour, one from the Association of pensioners and one member representing the interest of personnel of Security Organizations who are not a member of the Ghana Armed Forces and thus are mandatory contributors to the Fund.

Common sense will demand that the Government doubling as the champion/originator of SSNIT/ the provision of the initial assets including some of the lands which the assets of the Trust are located and the biggest employer must provide the Chairman of the Board, technical personnel especially one from the Ministry of Finance and two others at least one of whom must be a woman.

The Employers (excluding Government) through the Ghana Employers’ Associations must have representation on the Board of SSNIT and have been granted two slots. This is very necessary for two reasons (a) The Employer is to make contribution to the Fund through a top up of the affected worker’s welfare contribution with 13 percent of the basic pay of an affected worker and take only 0.5 percent from the pay of the worker thus making a total of 13.5 percent as the contribution and this is to be paid to SSNIT to share 2.5 percent with National Health Insurance and invest the 11percent in a very profitable ventures under Tier One. (b)Employers are responsible for taking 5 percent of the pay of affected worker’s contribution to be paid to the staff’s nominated authorized Fund Manager under Tier 2.

It is true that Hon Bryan Acheampong as the true owner of Rock City Hotel, is a political exposed person but Rock City is a Corporate Body registered in Ghana and operates under the Constitution of Ghana and the laws of Ghana. SSNIT as a Welfare Foundation or Corporate Body is to act within the Constitution of Ghana and applying the laws of Ghana when dealing with Corporate Bodies related to its core businesses.

SSNIT as stated is self-governing or independent in decision making and neither a worker of Rock City Hotel nor a member of the Management of Rock City Hotel sits at the meetings of the Board of SSNIT or that of the management of SSNIT. Likewise the owner of Rock City Hotel alleged as Mr Bryan Acheampong does not sit at the meetings of the Board of the SSNIT nor that of the Management. So as far the matter of offloading 60 percent of the shares of SSNIT in her hotels to a strategic partner for investor and management in the affected hotels is concerned, the issue of conflict of interest or conflict law is moot.

SSNIT is only looking for a Majority Shareholder as a strategic partner for huge investment and effective and efficient management and share the dividends to be accrued according to the percentage of investments of the Parties. So the land on which the hotels sit on will still belong to SSNIT and for technical reasons one may say the Government, since it is likely that some lands especially that of Labadi Hotel were acquired by the Government through eminent domain in 1991.

The PNDC acquired the land and caused the AGC Obuasi Mine under Dr Sam Jonah to build at the cost to the Mine, a first class hotel with at least two Presidential suites to accommodate or host Presidents and VIPs for the meeting of Non Alignment Nations or States in 1991 and subsequent use for accommodation of foreign dignitaries etc and interested persons.

So, the affected Chiefs and other persons must be educated that the transaction by SSNIT and Rock City Hotel does not mean the transfer of ownership of the assets to Rock City but just a transfer of the associated risks of the assets to the Strategic Partner. Of course, should the situation demands any modification of the area or the assets, this should be done as dictated by the Agreement.

From the above, it should be clear that the attack against SSNIT is unwarranted. We may have cases against Hon Mr Bryan Acheampong if he failed to adhere to Constitutional and Statutory requirements as a Member of Parliament and owner of Rock City Hotel. This could only be tested in Parliament since he is a Member of Parliament and or in a competent Court under the Judiciary Arm of Government and not in the Court of public opinion if we want the matter to be successful.

Let me say again that, Common sense theory tells that the Chairman for the SSNIT Board, the CEO and technical personnel especially from the Ministry of Finance must come from the Government as the Champion of SSNIT as well as the largest employer or biggest contributor to SSNIT as well as Government as the provider of some of the initial assets especially land acquired through the principle of eminent domain for SSNIT. This is in addition to the monthly contributions of 13 percent of the basic wages of the worker by the Employer for payment to SSNIT by the Government as an employer.

It is envisaged or expected that common sense may prevail to halt the ugly noises if we review the historical background of SSNIT. So, let me attempt to do so in the next pages.

Historical background of SSNIT
Voluntary Private Pension and Public Pension schemes in the form of Provident Fund to pay lump sums during disengagement or retirements or incapacitation of a worker existed in the Gold Coast that is before Independence of the Gold Coast which resulted in the new name as Ghana.

Ghana immediately on attainment of Independence and in order to see to the welfare of workers of Ghana on retirement, the Government of Ghana through the Administration of Dr Nkrumah introduced a Social Security Scheme for all workers. Initially, it was a national Compulsory savings scheme which involved a compulsory deduction from the wages and salaries of all workers and paid into Government Chest. This was with the assurance that the worker would get his saving with accrued interest as lump sum on compulsory retirement at a legislated age.

Due to some problems, the Compulsory Scheme with contributions by only workers for a Provident Fund was later on abolished by President Dr Nkrumah. He and the Parliament of the first Republic formalized a compulsory National Pension Scheme in 1965 by the Social Security Act 279 (1965) in the form of Provident Fund for all workers to replace the Compulsory savings against benefits of the worker on retirement.

Act 279 of1965 decreed an employer to deduct 7.5% of the pay of its or his or her worker and top up with 15% of the basic pay of the affected worker and pay the total sum made from the 22.5 percent to the State Insurance Corporation (SIC) or Government chest.

Act279 provided the Trustees as the Department of Pension for the policy and general administration and the State Insurance Corporation for inspectorate, investment/operation of the fund. 2percent of the Contribution was set aside as contingency fund against life insurance and unemployment etc.

Based on complaints from some employers and some workers, the threshold of the percentage of the contribution by the employer and the worker was later on reduced by the administration of President Dr Nkrumah to 5 percent from the pay of the worker and 12.5 percent of the basic pay of the affected worker to be contributed by the employer.

The CCP regime planned the Social Security Scheme as a Provident Fund with a payment of lump sums to entitled persons for five year period after which it was to be converted into a periodic monthly pension scheme. The Social Security Scheme or the Provident Fund provided the retirement’s needs or benefits and other contingency needs including when not employed and transportation of the working population at reasonable rate or free if with Transportation warrants.

The monetary benefit initially was essentially involved the return of the contributions of each worker and 3% of interest accrued to the worker’s contribution whilst the Trustee kept 3 percent for the administration of the Trust. Thus the Trustees were/are motivated to make very profitable investment for the sustainability of the Fund and to earn substantial profit for the benefits of the worker and the Trustees.

The Scheme as introduced by President Nkrumah was maintained by Prime Minister Dr Busia and the Progress Party in the Second Republic but it nearly met some setbacks during the Aliens Compliance Order by Dr Busia’s regime. This was likely so because some greedy and dishonest full blooded Ghanaians also swore affidavit that they were aliens, so as to receive the benefits under the Emigration Benefit portfolio.

Enter the Military Regime of the NRC of General Acheampong in 1972. In 1972, the NRC through the NRC Decree 127 (NCRD127) set up SSNIT as an autonomous body with an effective organizational structural and tripartite Board of Directors with members or Reps from the Government, the Association of Employers and from Workers (Two Reps from the Organized Labour, one Rep from the Association of Pensioners and a Rep from the Security Organization excluding the Ghana Armed Forces).

The Board meant to administer a National Pension Scheme in the form of a Provident of Fund for all workers excluding Military personnel for the payment of lump sums.

The NCRD127 maintained that Employers to take a contribution of 5 percent from the pay of the worker and top up with 12.5 percent of the basic and pay the sums accrued as the total of 17.5 percent to SSNIT.

The Law gave the core mandates of SSNIT as to (a) register employers and workers except the Ghana Armed Forces and the Military personnel (b), collect contributions from employers, (c), manage the record of members, (d) invest the fund of the scheme (e). Process and pay benefits to eligible members and nominated dependents on death of the contributor.

In 1991, the NCRD127 was repealed and replaced with PNDC Decree (PNDC Law 247 of 1991

by the regime of the PNDC under Chairman of the PNDC namely Flt Lt JJ Rawlings. It converted the Provident Fund to a pension scheme with the same mandate.

The features of PNDCL 247 include (a) holding the Social Security fund in Government bonds at an interest rate of 6 percent, (b) out of the interest, SSNIT was to enjoy 3 percent and 3 percent to the affected workers account, (c) a monthly pension to qualified members from their related contributions and related interest accrued from the investment of the 12.5 percent of the basic pay by employer and 5 percent by his or her or its worker excluding the personnel of the Military, both sums were paid to SSNIT by the Employer (d)The minimum contribution period was 240months with full pension at 60 years. Later on, the PNDC added a Student Loan Scheme under SSNIT to manage on behalf of the government.

Enter President JA Kofour with a New Pension Scheme bill in 2008 which was enacted by Parliament as the National Pension Act 766 of 2008. The Act 766 decreed 18.5 percent of a mandatory contributions to be made of 5.5 percent from the pay of an eligible worker that is a worker who is not above 55 years and the employer contributes or top up with13 percent of the basic pay of the affected worker.

Act 766 established a contributory Three Tier Pension Scheme and Provident Fund. The first two as mandatory for all workers and their employers with the exception of the Ghana Armed Forces and her personnel.

The Tier one is a monthly pension scheme is related to SSNIT, which now pays only the monthly pension of a beneficiary. The Tier Two Scheme is a Provident Fund and is related to private Fund Managers under the Authority of the National Pension Regulatory Authority as the Regulator for the Pension Scheme and Provident Fund. The Third Tier is a voluntary one to be fully funded by members as a provident fund and managed privately by an authorized Fund Manager

Upon collection of the total of 18.5 percent by the Employer, the Employer is required to pay 13.5 percent of the contribution of each qualified worker to SSNIT for Tier One Pension Scheme or Tier and National Insurance cover of 2.5 percent. The employer pays the 5 percent of the contribution of each qualified worker under the Tier Two Scheme to a nominated authorized Trustee as Provident Fund Manager.

Note that SSNIT upon collection of the total Contributions of 13.5 percent per eligible worker, retains 11 percent for investment, and pays 2.5 percent to National Health Insurance Authority towards the affected worker Health Insurance.

Act 766 also established National Pension Regulatory Authority (NPRA) to regulate and monitor the Pension and Provident Fund Industry by seeing to the efficient administration of the Pension Scheme and Provident Funds.

The portfolios of the new Pension Scheme as provided under Act 766 include investment in residential and commercial real estate development, the hospitality industry and as a catalyst in the development in the capital market.

The Scheme is to provide pension benefits to ensure retirements income security for workers that is to ensure every contributing worker receives retirement benefits as and when due through a standard for the administration, payment of retirement and related benefits for workers

Entry age new Minimum age 15years and maximum age for new entrants is 45 years

The Benefits under Act 766 include (a). Superannuation/Old Age Pension with full pension to a contributor who must be 60 years old and must have a minimum of 180 months or 15 years of contributions. Then reduced pension must be 55 years and above but bellow 60 years and must have made 180months (b) Survivors Lump Sum payment (c) Emigration benefits to expatriate staff or non-Ghanaian who are leaving Ghana who are also contributors as the law requires or in case of death the benefits are paid to the nominated dependents of non-Ghanaian members of the Trust.

It is envisaged with the above narrations there may be sanity in the public discourse in a very sensitive matter concerning the maximization of the profits of SSNIT, in order to ensure the sustainability of the Fund as well as the payment of realistic pension to pensioners.