The International Social Security Association’s(ISSA) Guideline 2 on the Investment Mission and Goals of Social Security funds focuses on an organization or a pension fund’s reason for investing and how it aspires to serve its key stakeholders.
In Ghana, a section of the members and contributors of the Social Security and National Insurance Trust (SSNIT) have little or no idea of how their contributions are invested or managed.
Members of the scheme want to know if their contributions are managed well and will lead to future financial security for themselves and their dependents.
Meanwhile, there have been growing concerns over the recent report by the International Labour Organisation (ILO) regarding the depletion of the Social Security and National Insurance Trust (SSNIT)’s financial reserves.
The report signifies a significant threat to the financial commitments made by SSNIT to its beneficiaries.
According to the ILO report, SSNIT’s reserves are projected to be completely depleted by 2036, based on its actuarial valuation.
SSNIT, which initially operated as a Provident Fund providing coverage for accidents, old age, disability, and death, transitioned into a Social Insurance Pension Scheme governed by the PNDC law 247 in 1991.
Since then, SSNIT has played a crucial role in providing financial security for retirees, covering approximately 1.6 million Ghanaians, representing about 16% of the country’s workforce as of 2020.
However, in recent years, the administrative expenses of managing pension funds have been increasing steadily, consuming a larger portion of member contributions.
This trend raises concerns about how effectively these funds are being utilized for the benefit of the beneficiaries.
The report indicates that from 2008 to 2020, the average return on total assets was 12.2 percent, with a real average return on assets of only 0.9 percent after adjusting for inflation.
In a response, SSNIT dismissed the report asserting that it presently receives contributions and has enough funds to pay accruing benefits due members.
It added, “The SSNIT pension scheme, as set up by ACT 766, is a partially funded scheme, and pension payments are funded from contributions and returns from investments.”
For Social Security institutions that have an investment mandate, legislation, policy or decree may establish the
general direction of the investment policy and prescribe the types of investment instruments allowed.
To maximize the long-term rate of return on reserves while at the same time mitigating investment risks and taking into account the nature of liabilities, the range of instruments allowed for investment has to be sufficiently diversified.
Several factors influence the investment strategy of an institution including the security of
investments, expected rates of return, cash flow issues and the nature of the liabilities of the organization.
Unlisted equities represent ownership interests in companies whose shares are traded privately (that is, the shares are not traded on the open market). They are also sometimes referred to as unquoted investments. SSNIT currently has ownership interests in forty-seven (47) unlisted companies.
The unlisted equities portfolio (including Economically Targeted Investments) makes up about 23.5% of the Trust’s total Assets under management (value as of June 2017).
Most of the investments are for financial gains but the Trust has invested in a few others for economic reasons (e.g. Metro Mass Transit, the Abattoirs, Exim guaranty, and Export Finance).
The asset class is highly diversified across the various sectors of the economy namely; Financial, Manufacturing, Services, Real Estate and Energy, making SSNIT a significant investor in Ghana’s economy.
Financial
SSNIT has investments in eight unlisted companies in the Financial Sector.
Fidelity Bank Limited and Ghana International Bank are the main drivers of the
group in terms of dividend payment.
Real Estate
Real Estate is a major component of SSNIT’s Investment portfolio. Investments in the sector
comprise development projects such as commercial residential facilities, commercial
lettable office spaces and mixed-use developments often implemented through Joint
Venture companies.
Services
The Services sector has benefitted significantly from SSNIT’s investing activities, with
a special focus on hospitality, health, and transportation. The plush 5-star Labadi Beach Hotel
is wholly owned by the Trust, as is the range of Golden Beach Hotels.
Here are the companies and the shares SSNIT holds:
| Company | percentage(%) | |
|---|---|---|
| 1 | NATIONAL TRUST HOLDING COMPANY LIMITED | 43.48 |
| 2 | GHANA INTERNATIONAL BANK PLC | 15 |
| 3 | FIDELITY BANK LIMITED | 13.58 |
| 4 | UNIVERSAL MERCHANT BANK GHANA LIMITED | 8.96 |
| 5 | CONSUMER FINANCE COMPANY | 5.70 |
| 6 | EXIMGUARANTY COMPANY LIMITED | 5.0 |
| 7 | EXPORT FINANCE COMPANY LIMITED | 3.00 |
| 8 | CDH FINANCIAL HOLDINGS LIMITED | 1.30 |
| 9 | CCL PROPERTIES LIMITED | 100 |
| 10 | GHANA INDUSTRIAL AND COMMERCIAL ESTATES LIMITED | 100 |
| 11 | GHANA HOSTELS LIMITED | 100 |
| 12 | MMC PROPERTY MANAGEMENT LIMITED | 90 |
| 13 | WEST HILLS RIDGE COMPANY LIMITED | 80 |
| 14 | SWITCHBACK DEVELOPERS LIMITED | 70 |
| 15 | TRUST F-LINE PROPERTIES LIMITED | 70 |
| 16 | RSS DEVELOPERS LIMITED | 60 |
| 17 | TRUST SPORTS EMPORIUM | 60 |
| 18 | FOS ALUMINIUM LIMITED | 44.00 |
| 19 | BESSBLOCK CONCRETE PRODUCTS LIMITED | 40.00 |
| 20 | GHANA AGRO-FOOD COMPANY LIMITED | 40.00 |
| 21 | SENTUO STEEL LIMITED | 26.00 |
| 22 | TEMA LUBE OIL COMPANY LIMITED | 24.00 |
| 23 | GRANITE AND MARBLES COMPANY LIMITED | 22.00 |
| 24 | SUBRI INDUSTRIAL PLANTATION LIMITED | 13.60 |
| 25 | BRIDAL TRUST INTERNATIONAL PAINTS COMPANY LIMITED | 60.00 |
| 26 | BMK PARTICLE BOARD LIMITED | 48.78 |
| 27 | NINGO SALT LIMITED | 40.00 |
| 28 | DANNEX LIMITED | 5.64 |
| 29 | GULF CONSOLIDATED LIMITED | 42 |
| 30 | BROLL GHANA LIMITED | 32 |
| 31 | GOLDEN BEACH HOTELS LIMITED (LA PALM, ELMINA, BUSIA) | 100.00 |
| 32 | HOTEL INVESTMENTS GHANA LIMITED (LABADI) | 100.00 |
| 33 | SSNIT GUEST HOUSE LIMITED | 100.00 |
| 34 | TRUST LODGE | 100.00 |
| 35 | TRUST LOGISTICS | 100.00 |
| 36 | TRUST HOSPITAL LIMITED | 100 |
| 37 | OGUAA HOTELS LIMITED (RIDGE ROYAL HOTEL) | 94.43 |
| 38 | SIMNET GHANA LIMITED | 85.00 |
| 39 | INTERCITY STC COACHES LIMITED | 80.00 |
| 40 | KUMASI ABATTOIR COMPANY LIMITED | 53.40 |
| 41 | ACCRA ABATTOIR COMPANY LIMTED | 36.63 |
| 42 | GRAND REGENCY HOTEL | 25.00 |
| 43 | METRO MASS TRANSIT LIMITED | 12.00 |
| 44 | AFRICA WORLD AIRLINES | 10.00 |
| 45 | ACCRA CITY HOTELS LIMITED | 5.00 |
| 46 | CENIT ENERGY LIMITED | 100 |