The National Pensions Act, 2008 Act766 mandates the National Pensions Regulatory Authority (NPRA) to have an oversight responsibility of the Tier 2 and Tier 3 funds of both public and private pension scheme in Ghana which commenced in 2010. The NPRA however, in their bid to diversify the investment portfolio of pension fund managers which was dominated by investments in government securities, has proposed new investment guidelines for a more diverse allocation of the schemes managed by various pension fund managers.
The proposed change allows fund managers to invest up to 60% of assets in government securities, 35% of assets in corporate debt securities and 35% of assets in bank deposits as well as other money market securities. This comes against the previous asset allocation of 75% in government securities, 30% in corporate debt securities and 35% in bank deposits and other money market securities.
The change also captures the introduction of a new asset class of alternative investments with a 15% allocation. This allows pension fund managers to invest funds in real estate, trust funds, private equity funds, hedge funds and external investment in securities.
The new proposed change will offer private sector companies in search of alternative sources of financing an avenue to utilize the various long term funding opportunities under the new pension scheme by liaising with fund managers and trustees. The change will also improve the liquidity on the capital market in Ghana and further create room for more listing on the Ghana Stock Exchange and the alternative exchange
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