View Full Version : SSNIT says Informal Sector Fund is safe

18th January 2012, 03:56 PM
SSNIT said on Wednesday that it would take steps that are necessary to maintain confidence in the operation of the SSNIT Informal Sector Fund (SISF).

“SSNIT as the sole shareholder also clearly owes the contributors under the SISF scheme the responsibility to ensure the integrity and safety of their savings and pension expectations,” SSNIT said in a statement.

It said the SISF was established in February 2008 and is mandated to run an informal sector pension scheme. It has an Executive Council that directs its affairs and reports to SSNIT.

The statement said SISF is one of the major initiatives introduced by SSNIT to expand Social Security coverage to majority of the working population of the informal sector who would have no other source of income in old age or during invalidity.

It said the vision of SISF is to become the market leader and pioneer in the provision of social protection schemes for workers in the informal sector, through innovative product design, excellent customer care.

The statement said with the operationalisation of the National Pensions Act in 2010, the pension fund arrangements and management of the various contributor schemes had changed, together with the status of the players.

For instance, Act 766 mandates SSNIT to manage only the First Tier (Tier 1) and accordingly receives only 11% of the 18.5% of contributions as compared to receiving the 17.5% of contributions under PNDC Law 247.

Comparably, the operations of SISF come under the voluntary Third Tier (Tier III) with different rules, arrangements and management requirements.

The statement said as a pioneering effort by SSNIT in seeding the mobilization of savings and structuring a pension fund for the informal sector, SSNIT had provided start-up support of GH¢7.2 million to the SISF.

It said the Fund’s administrative costs and operational sustainability had become a critical matter because a fund manager needed to cover operational costs from a fixed fee and not from a continuous injection of external non-contributor funds.

SISF as currently operated, the statement said, is unable to cover its administrative costs despite the claimed registration of 90,000 contributors with a fund size of GH¢23 million.

Also, the mandatory Tier I contributions that SSNIT now manages cannot be used to support a voluntary Tier III Fund by way of ‘budgetary support’.

The statement said the already advanced GH¢7.2 million of Tier I funds are in reality a loan advanced to the SISF which will need to be recovered if the operation of SISF were to become independently sustainable.

It said in view of the unfavorable trend SSNIT, as the sole shareholder of the SISF, had considered various approaches to sustain the informal sector fund including discussion of restructuring options with the Executive Council of the SISF and in line with its fiduciary responsibilities.

The statement said as recently as the last quarter of 2011, SSNIT intervened again with funding to cover salaries of the SISF staff for November 2011 through January 2012.

It said this cannot continue if the fund is to be independent and sustainable, and not a drain on SSNIT’s discharge of its Tier I responsibilities.

“Indeed, SSNIT cannot look on these developments in the fund without concern. That is why as part of the SSNIT initiated interventions last year, the SSNIT Board of Trustees gave the Executive Council of SISF up to the 16th of January, 2012 to submit options or interventions that will ensure the Fund’s independent sustainability as a self-financing Tier III scheme,” the statement said.