Accra, Ghana//-Joseph Ampofo, Managing Director (MD) of Enterprise Trustees, a leading pensions subsidiary of the Enterprise Group, has called on Ghanaians to take advantage of the country’s burgeoning Tier 3 Fund scheme to boost their retirement benefits.
Mr Ampofo made the call at an advantage webinar that focused on the Ghana’s pension industry particularly the Tier 3 Fund.
According to him, Tier 3 Fund could improve retirement income if Ghanaians take full take of the New Pension Law.
Mr Ampofo added that the increasing life expectancy of Ghanaians (64.19 years) that makes planning for retirement critical.
He defined Tier 3 Fund as a personal pension scheme set up by a corporate trustee duly licensed by the National Pensions Regulatory Authority (NPRA). It can also be a provident fund set up and contributed to by employer/ employee or both.
Benefits of Tier 3 Fund
The benefits of the Tier 3 Fund Mr Ampofo mentioned are numerous. But it provides additional opportunity to the employee(s) to build a solid retirement fund.
He added: “The Tier 3 Fund can be used as a security to boost opportunity to access third party loans or mortgages for employees”.
To the employer, the MD said it could be used as a retention mechanism for loyal and productive employees.
Another opportunity for the Tier 3 Fund is that it can be used to raise funding for major development projects from the private sector. While the Tier 3 Fund’s contributions up to 16.5% into a registered fund do not attract taxes.
Pitfalls to avoid
The sole reliance on the two mandatory pension schemes- Tier 1 managed by SSNIT, and Tier 2 managed by privately approved corporate trustees, should be avoided, according to Mr Ampofo.
Other pitfalls such as missing out on the magic of compounding to defer a regular Tier 3; not checking statements to track monthly contributions and not updating beneficiaries; and not having a documented retirement plan and reviewing it at least yearly, should be entertained.
Instructively, The Tier 3 is a voluntary, fully-funded by members and a privately managed provident fund and personal pension scheme, while SSNIT pays only the monthly pension of the beneficiary and the Fund Managers who manage the Tier 2 with the 5% contribution rates pays the lump sum.
African Eye Report
