Dr Kpesah Whyte write: 10 reasons why the leadership of organised Labour is wrong on the Tier Two Pensions Scheme. The Tier Two is a Defined Contribution Scheme. Under this scheme, a contributing worker who attains the statutory retirement age will be given as benefit the total contribution made into the scheme throughout the participation period, plus interest accrued, and minus fees and charges applied by the trustees, custodians, and fund managers. Under the Pensions Act, government does not have to directly manage the Tier Two, it is to be privately managed. However for public sector workers, the choice of trustees to provide policy direction of the scheme rests with government as the employer and the contributor of the lion share to pension funds in Ghana. Here are 10 reasons why the leadership of organised Labour is dead wrong on the Tier Two. 1. Government as an employer must, rightly have a vested interest in the future welbeing of its workers because a well managed defined contribution scheme is an incentive for higher productivity. 2. Government as an instrument of state authority has a responsibility to ensure that the future of all citizens especially those who chose a career in the public sector do not suffer on account of private interest in the investment of pension funds. 3. Government as a policy maker who compelled Ghanaian citizens to invest a portion of their retirement contributions towards income security at old age, is ultimately responsible in the event of insolvency, hence, the need for government to have vested interest in the choice of trustees. 4. When a worker retires, s/he loses the protection of organized labour, and reverts solely to the position of an individual citizen whose overall welfare must be of great concern to the State which is represented at all times by the government of the day. 5. Pension funds are for pensioners not workers ! The right to that fund in an employer sponsored scheme only accrues upon retirement. Till then, workers cannot lay claim to the fund. A worker is not a pensioner until s/he retires voluntarily or attains the statutory retirement age. 6. Government as an employer contributes 13% of the money that goes towards income security of workers when they retire, hence, it is imperative that government determines who and how that money is invested. 7. By all means, the private sector players (trustees, fund managers, and custodians) must be given an active role in the investmemt and management of pension funds as envisioned in the pensions Act. However, the recent experiences of Pyram, Labour Enterprises Fund, and Susu collectors etc who duped innocent Ghanaians also go to illustrate why government must proceed cautiously in choosing who invests the contributions made towards retirement income security of Ghanaians. 8. The demand by labour to choose trustees for the tier two pensions will leave the future of workers, especially when they retire, almost entirely at the mercy of private businessmen; who cannot provide the same guarantee the concern for citizens welfare compels government to provide. 9. The bottom line in all pension matters across the world is the protection of citizens when they are old and vulnerable. That responsibiliity rests with government, hence the need for government to take keen interest in the management of funds set aside for that purpose. 10. Examples from countries in Latin American especially Chile, that started Defined Contributions scheme, by allowing workers to choose their own fund managers, but quickly turned to allow the State for greater role in the wake of investor fraud and market failures, means we must be guided by the experience of others in order to properly protect the future of Ghanaians. Either the leaders of organized labour do not know what they are asking for; are ignoring best practice; are being influence by some political and business interests from behind the scenes; working as surrogates for special interest; or they are simply using the tier two pensions to boost their rating among the rank and file. As Ghanaian workers we must unite against the tyranny of our leadership and defend the public realm. So stand up! At the end of it all you will retire alone, not with your union.
Posted on: Sun, 26 Oct 2014 08:04:32 +0000
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