Pension assets surge by 33%, driven by high participation and govt commitments

Ghana’s pensions industry recorded robust growth in 2023, with Assets Under Management (AUM) in the sector rising by 33.0%, according to the latest Financial Stability Review. The Three-Tier Pension Scheme’s AUM reached GH¢61.8 billion by December 2023, a significant increase from the GH¢46.6 billion reported at the end of 2022.

The report attributes this remarkable growth to a successful alternative offer to pension funds, which saw a participation rate of nearly 95%. Additionally, the government’s commitment to timely payments under the offer, along with its partial redemption of contributions, contributed to this increase. Stricter enforcement actions, including the prosecution of employers who defaulted on mandatory pension contributions, further supported the rise in AUM.

Private Pension Funds Lead Industry Growth

Private Pension Funds were a key driver behind the industry’s expansion, recording a growth rate of 32.0% in 2023 compared to 26.0% in 2022. By year-end, private pension funds reached a total of GH¢46.5 billion, up from GH¢35.3 billion in the previous year. This growth reflects both improved investment returns and intensified efforts to prosecute employers failing to make required Tier 2 contributions. These factors have enhanced fund stability and continue to position private pensions as a significant contributor to the sector.

Growth in Public Pension Funds Under the Basic National Social Security Scheme

Public pension funds managed under the Basic National Social Security Scheme (BNSSS) also demonstrated strong growth. The AUM for these funds rose to GH¢15.30 billion in 2023, up from GH¢12.11 billion in 2022. This increase represents a 26.3% rise year-over-year, a notable improvement from the 4.9% growth rate recorded in 2022. The jump in AUM for public pensions was largely driven by the government’s payment of contribution arrears, which provided a significant boost to the fund’s overall value.

Outlook and Sustainability The 2023 performance of Ghana’s pension funds highlights the sector’s resilience, bolstered by high participation rates and regulatory measures. With both private and public pension funds showing strong gains, the industry appears well-positioned to continue this positive trajectory. As the government remains committed to its payment obligations and enforcement efforts, Ghana’s pension sector is poised to maintain its growth and provide greater security for retirees in the years ahead.