The government has hinted of its intention to rely heavily on pension funds from the Social Security and National Insurance Trust (SSNIT) to help bridge the housing gap in the country.
The Minister designate for Works and Housing, Mr Samuel Atta-Akyea, who dropped the hint during his vetting on January 31, said SSNIT would be made to set aside pension funds to finance affordable flats throughout the country as part of measures to reduce the housing deficit.
Mr Atta-Akyea said that SSNIT had a lot of idle funds which needed to be invested in the housing sector to enable contributors to the scheme enjoy the benefits of their labour by having a roof over their heads.
How liquid is SSNIT
The comments by the Minister come at a time when SSNIT is presently facing some dire liquidity challenges which require urgent attention to keep the scheme running on a more sustainable basis.
For instance, for more than two years, the government has not released funds from the contributions of workers on its payroll to SSNIT. More than 60 per cent of the almost one million contributors on the SSNIT pension scheme are on the payroll of the government.
Sources at SSNIT said that some of the private sector contributors were always reluctant to releasing the deductions of their workers to the Trust in spite of the numerous court actions taken against recalcitrant private sector companies.
It is estimated that more GH¢2 billion is outstanding to the Trust and no concrete arrangements have been put in place to reduce the mounting indebtedness of the government to the Trust.
Presently, the Trust doles out about GH¢100 million a month to settle pensions which also goes up by not less than 15 per cent per annum after each review.
With the passage of the Pensions Act, Act 766, which among other things introduced the tier pension scheme, the number of years workers have to contribute to the Trust has been reviewed downwards from 20 years to 15 years. Meanwhile, the percentage of contributions by workers to the Trust has been reduced from 17 per cent to 13 per cent, a situation which has drastically reduced the investible funds of the Trust.
As at 2014, the return on investments of the Trust was about 3.2 per cent, making it solvent but there are fears that the return on investment has dropped over the years because of the reduced inflows from contributors, particularly the government. This has forced the managers of the scheme to fall on its savings and other investments to remain liquid and to be able to meet its monthly obligations to pensioners.
Actuaries at SSNIT who spoke on grounds of anonymity said the intention of the government was apt. However, they warned that in order to have the right return on the investment of funds from contributors, the Trust would have to ensure that the houses proposed would be sold at market prices to recoup the investments made.
“Anything short of that will put the scheme in danger because the amount involved is huge,” one said.
SSNIT in housing
SSNIT ventured into the housing sector during the Rawlings regime when hundreds of flats were built and rented at affordable rates. Notable among the flats were the Dansoman, Adentan and Sakumono flats in Greater Accra Region which are being occupied by individuals, most of whom are not contributors to the scheme.
Due to the drain, the maintenance of the flats had on the Trust at the time, a decision was reached in the early 2000s for the flats to be sold outright, even at rock-bottom prices because the managers of the scheme decided to disinvest in the housing sector. In the process, SSNIT lost millions of Ghana cedis because of its inability to recoup what it had invested.
However, getting to the end of the Kufuor administration, the Trust was pushed into the sector again as it was made to support the construction of the government’s ‘affordable’ housing project at Kpone, among others. This was continued by the Mahama regime. But today, the completed flats are not being patronised because of the cost. Reports say the rooms cost above US$55,000, way above the capability of the ordinary man whom the government intends to target with its affordable housing scheme.
“So at the end of the day, it is not about SSNIT going into housing but it is about how affordable that project can be to the target market the Minister is referring to,” one of the sources at SSNIT said.
“Today we have many flats people cannot buy so if the government attempts to push us into doing what will not enable us to have return on the investments we make because of political expediency, the whole tier one pension scheme will be in serious danger,” the source warned.
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