THE narrative when it comes to retirement for informal sector workers has not been a topical national conversation for a long time until recently when the National Pensions Regulatory Authority (NPRA) adopted the approach to encourage the informal sector to take up a pension plan.
Though the result may not have been fully yielding, the calls must still keep going on until the desired goal of enrolling almost all informal sector workers on pensions plan.
It is in this light that a Pensions Advisor at the Axis Pension, Mr Ken Nortey, has called on the informal sector workers to sign onto pension schemes to secure their future and avoid old-age poverty that may be looming. It is very important that in any sector you find yourself in, you prepare for retirement because any person is prone to two basic things in life – death or retirement.
He said from research, it has been established that most people in the informal sector do not have any coverage when it comes to social security in Ghana, noting that only three per cent are covered. Mr Nortey said people must plan for their retirement because old-age poverty is very real, noting that those in the formal sector with guaranteed pension with their statutory arrangement still have challenges with their pension arrangements as of now.
He was speaking in an interview with this reporter at a National Vocational Business and Start-up Conference organised by Compassion International Ghana in collaboration with the African Entrepreneurship School, the facilitator. The Conference trained and gave seed capital to 110 young entrepreneurs in the informal sector. The informal sector currently constitutes about 85 per cent of the country’s working population and hence the need to ensure that they are part of the pensions scheme.
Mr Nortey said what the low uptake of informal sector retirement plans is because many had the notion that the idea of pension was meant for only people in the informal sector over a long period. He was however optimistic that with adequate education, informal sector players would have the cause to take up pension plan against their old age.
On her side, however, the Education and Sensitization Expert at the Corporate Affairs Unit of the National Pensions Regulatory Authority (NPRA), Mrs Rosina Akrofi said the authority has been embarking on vigorous education over the past few years to ensure participation of all and sundry in the pension’s scheme. She noted that the Authority has been doing a lot in terms of education to create awareness of the informal sector but the problem is the low level of literacy. She said the informal sector workers constitute a significant chunk of the working force, hence, it would be unfair if the majority of them do not have pensions.
She noted the informal sector workers mostly have a low level of literacy rate and that people are also apprehensive about where they could invest due to past happenings in the financial sector. She cited the close of some banks and financial institutions in 2019 as one of the reasons for the apprehension. The likes of DKM, Menzgold, and others have played a very huge role in making people restrictive in investing towards the future through a pension scheme.
Mrs Akrofi said the NPRA has instituted some measures to rope in the informal sector such as a market activation programme, where the regulator with the Trustees go to the market setting to hook up with the market women and that has yielded positive results. She said the Authority also started the mobile sensitization programme last year but due to the COVID-19 pandemic, it was suspended.
She said the regulator has given reviewed some of its guidelines to allow the Trustees to have a very good compensation working with the informal sector because the players in this sector are very difficult to work with and working with them is also capital intensive. She noted that most Insurance firms would rather go for formal sector workers because once the employer is convinced, they could sign on all employers but with the informal, each employee would need to be very convinced to sign onto a pension plan.
She said the NPRA would soon come out with a programme called “Switch” to help the Pensions Trustees working in the informal sector to be able to get the numbers by knowing where the informal sector workers are doing their business to rope in more of them in the scheme. Mrs Akrofi said the NPRA has declared the years ahead for the informal sector so that all workers in the sector could be roped into the pension scheme.
She noted that before a definite action was taken to rope in the informal sector, it was only three per cent of informal sectors on some form of pension scheme but said the scheme is currently doing well although she could not give a percentage point to the updated increase in number. She said initially there were no schemes for the informal sector but as of today, there were 30 schemes focused on including the informal sector into the pension scheme.