Gov’t to use pension funds to fund long term projects – Senior Minister

Yaw Osafo-Maafo, Senior Minister

Pension funds are to be used to fund government’s long term projects. That is according to trained banker and Senior Minster, Yaw Osafo-Maafo.

“With pension funds, monthly additions are made so there’s no fear it will suddenly dry up,” he said adding all over the world, governments have used pension funds to pursue long term agricultural projects, mortgages and others so Ghana adopting the initiative would be a right move.

He however stated that it is only after key consultation would it require a portion of the fund to be loaned out for the projects as the welfare of young citizens must also be factored in.

Mr. Osafo-Maafo was a Member of Parliament for Akyem Oda Constituency for three terms and the Minister of Finance and Economic Planning for four years from 2001-2005.

Ghana’s pension reform began in 2006 when a report was published calling for the establishment of a three-tiered system. The new pension law came into effect as of 2010. As a result of the programme, total contributions were increased by 1 percentage point (equally shared by the employer and the employee).

In total the employer pays 13% and the employee 5.5%. From that 18.5%, 13.5% goes to the Social Security and National Insurance Trust (2.5% to the National Health Insurance scheme and the rest to the tier-one pension provision). The remaining 5% is directed into a privately managed second-tier programme. An optional third tier is also available, and individuals are allowed to invest, in total, 35% of their income into the three tax-advantaged tiers.