SSNIT has heavy investments in the energy sector

SSNIT investments: What future?

Charles Benoni Okine Business News Feb - 09 - 2016 , 10:51

Social Security and National Insurance Trust (SSNIT) was established in 1972 as a corporate body to administer the social fund.

The trust’s primary responsibility is to replace part of the lost income of workers in Ghana or their dependants in the event of statutory retirement, invalidity or death.

SSNIT currently has over hundred and fifty thousand pensioners and more than 1.2 million contributors.

Under the Act, Act 766, that set up the trust, the core functions of SSNIT are to: Register employers and workers; Collect contributions from registered employers on behalf of its registered workers; Be responsible for the general administration of the social security scheme and regulations made under it; Invest the pension fund assets in units of investment approved by the Board of Trustees; and Process and pay benefits to eligible members or nominated dependants when they fall due.

How the scheme is sustained

According to the General Manager, Investment and Development Division, Mr Noel Addo, investment management is one of the critical functions of social security administration.

He said as a partially funded scheme, it was the objective of SSNIT to maximise returns on its investments to support the ever-growing benefits payments, and also to meet the cost of administering the scheme.

SSNIT, through its Investments and Development Division, manages a well-diversified investments portfolio comprising short, medium and long-term instruments.

This investment process is executed within a defined investment policy framework in conformity with the National Pensions Regulatory Authority’s Investment Guidelines (Act766).

Considering the nature of the scheme, it is imperative for the trust to ensure that returns are positive, hence its investment policy is designed to achieve: safety, high speed, liquidity, asset/liability matching and diversification.

The trust’s investments also cut across a wide range of sectors in the Ghanaian economy. Among them are education, financial services, energy, hospitality, transport, real estate (residential/commercial), health and manufacturing.

The main classifications of these investments are: Fixed income – a portfolio of bonds (Corporate and Ghana Government), loan facilities and treasury placements; Equities – investment in both listed and unlisted companies; Real Estate – investment in landed property, project development and property management and Alternative Investments – including private equity and Economically Targeted Investments (ETI).

Equity Instruments and stock exchange

The trust’s equity instruments mainly consist of listed and unlisted companies.

The trust is the largest single institutional investor on the local bourse that is helping to nurture the development and sustenance of the Capital Market in Ghana.

SSNIT played a major role in the development of Ghana’s financial market - the Ghana Stock Exchange (GES) - and is currently a significant participant of shares listed on the bourse with investments in 22 of the 35 listed companies.

The trust also has investments in the equities of some companies that are not listed on the GSE. It currently has shares in 39 of such unlisted companies across different sectors of the economy.

This becomes even more crucial with the implementation of the new Pensions Law, Act 766, which came with its own challenges – reduction in the rate of contribution collection and increased benefits payments.

It has, therefore, become necessary for the trust to strategically undertake investments which are not only safe and promise returns, but more importantly now, investment that promises regular available cash to support the trust’s liquidity position.

Investment portfolio in its 50th milestone.

SSNIT has also invested in hotels that provide temporary accommodation, restaurant services and recreational facilities for businesses and clients. Among these are Labadi Beach Hotel, the first Ghanaian five-star hotel, Golden Beach Hotels which comprises La Palm Royal Beach Resort, Elmina Beach Resort and Busia Beach Resort and soon to be opened Ogua Hotel at Cape Coast.

Investments in transport

Additionally SSNIT has invested in transport service companies such as the Mass Metro Transit Limited which provide safe, reliable and affordable transport services targeted at the lower income segment of the Ghanaian society. And also the Trust Logistics Limited.

The Managing Director, Trust Logistics Limited (TLL), Nii L. Engman, said TLL operated a fleet of 40 trucks fairly evenly spread between wet and dry cargo operations.

He said TLL hauls for Ghana Post, Ghana Water Company, SSNIT itself “our sole shareholder and Metro Mass Transit” and added that “we also do haulage of a range of general cargo goods including flour, sugar and cement”.

Real estate (Housing)

As far back as 1974, the Trust committed funds into real estate development. The focus was to provide residential accommodation for the contributing public.

The initial effort was low keyed. However, this was pursued more vigorously by channeling of more funds into housing from 1987 – 1988. The vision was a long term investment which was to form one of the pillars for financing the pension scheme.

This is to ensure that workers got decent and affordable flats to live in and serve the country which will equally ensure income generation into the Social Security fund for the sustenance of the scheme.

Example of workers housing projects developed by SSNIT can be located in all ten regions of Ghana.

The Trust has opened up townships with infrastructural access with total residential housing units of over 7,168 all over the country, with 96 percent sold to mostly salaried workers.

Conclusion

There is a myriad of other projects that the trust has invested. There is no doubt that all these laudable investment initiatives or interventions are geared towards enhancing the partial income replacement of pensioners whose annual absolute growth is over 7,000.

It is envisaged that the trust will continue to branch into other sectors of the economy for the continuous quest to sustain the SSNIT Pension Scheme as well as boosting the economic and social development of Ghana.

While at it, it is also imperative for governments to stay off the funds of the trust. There are numerous reports about governments in the past and present interfering with the investment policies of the trust, a move that ends up locking funds that would have returned positive cash to improve the trust’s liquidity.

From every actuarial assessment it is evident that the scheme is sustainable and can stand the test of time all things being equal.