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The government has so far paid GH¢1 billion out of its debt owed to the Social Security and National Insurance Trust (SSNIT), the Director General of SSNIT, Dr John Ofori-Tenkorang, has disclosed.

The amount was paid through issuance of quarterly bonds and cash payments. He did not ,however, mention the total amount owed.

In an interview with the Assistant Editor of the Graphic Business, Mr Charles Benoni Okine on the GraphicTalks360 series, he said SSNIT engaged the government last year, after which the government gave an assurance to pay all the debt owed to SSNIT.

The interview, which is currently streaming on the Daily Graphic Facebook page and available on the Daily Graphic’s Youtube channel was on the theme ‘The SSNIT story after three and half years’.

“Governments in the past, when there is some tightness in the fiscal space haven’t been regular in paying the necessary remittances so there had been debt that has piled up. We engaged government and the President through the Ministry of Finance have been quite good.

“Last year, when we engaged them, the minister promised to retire all arrears including the ones it inherited by issuing us GH¢500 million in bonds every quarter,” he explained.

He said during the COVID-19 period in March, the government paid them about GH¢700 million in cash in order to remain liquid.

“We received GH¢500 million in the first quarter of the year, another GH¢500 million in the second quarter, third quarter has ended and hopefully we will get another GH¢500 million.

“If the government follows through with this programme, by middle of next year, we would have made significant improvement in paying the arrears, he stated.

Lump sum differences

The director general also gave an assurance that SSNIT would by the first quarter of 2021 resolve the differences in the payment of the lump sum for people who went on retirement this year

“There is a committee that is currently working on the differences and basically within next month, the calculation would be made and latest during the first quarter of the year they will be paid. We had an agreement with labour where we had a month to work out these differences.

“We are looking at about 20,000 people who retired but not all of them are affected because there are people whose lump sum under the new law is higher than the old one so there will be no need to top up for them,” he noted.

Investments

Shedding more light on SSNIT’s investment portfolio, he said the SSNIT scheme was set up in a way that made it impossible to pay all the benefits just from the contributions it received.

He said the scheme ,therefore, relied on investment returns to plug the hole.

“Any money that we get today that we do not use to pay benefits have to be invested. For a fund such as ours that will need liquidity in short periods of time, we have to get some of our investments in fixed income.

“We have some investment in the stock market where we own shares in companies. We also have some investments in alternative investments such as real estate. When you look around and ask people what are SSNIT’s investment, a lot of people will point to real estate because we own a lot of commercial buildings and residential buildings,” he explained.

On how well these investments are doing, he said, “in general, like every investment portfolio there are some that do well and there are others that don’t do so well.”

“In 2017, when the stock market was very buoyant, we did fairly well in the equities market. Then came 2018, with the recapitalisation of banks, a lot of banks instead of paying dividends had to plough back the money to meet the new minimum capital requirement. And for a fund like us, because we are so big, it is very difficult for us to go and sell stock on the capital market so we rely a lot on dividends,” he stated.

 Real estate sector

He said SSNIT also had some challenges in the real estate sector, as it had a lot of work in progress.

“We have a lot of work in progress. We inherited lots of real estate projects that were at various stages of completion and the market for real estate has not been buoyant in the last few years and prices too have been a bit depressed,” he stated.