As Ghana races against time to build a resilient energy sector that is stable, reliable, and affordable, a new perspective is emerging that maybe the country’s Tier 2 & 3 pension funds could come to the rescue.
For years, Ghana’s private pension funds have been treated as an egg. They quietly built from the monthly contributions of teachers, bankers, engineers, and shop managers, and for safety reasons, are mostly invested in government bonds, fixed deposits, and a narrow band of equities.
But according to IMANI Africa research analyst Sitsofe Mensah, that cautious strategy is no longer just conservative; it is costly in the long run.
The Need for a Rethink
Sitsofe Mensah argues that the recent Domestic Debt Exchange Programme (DDEP) exposed the long-held assertion that what was once considered a “safe” investment was not really safe but also vulnerable.
Pension funds heavily exposed to government securities found themselves earning negative real returns in the face of high inflation. In simple terms, money meant to secure retirement was quietly losing value.
This means that playing it safe is no longer safe.
A Lapse in Pension Regulations
The analyst further reveals that under current rules by the National Pensions Regulatory Authority, Tier 2 (occupational) and Tier 3 (voluntary) pension funds operate within tight boundaries.
This has resulted in funds being fragmented across multiple trustees and investment options being restricted and repetitive.
As he describes, the huge capital is effectively siloed, unable to tackle large-scale opportunities. This is why, despite billions of cedis sitting in pension accounts, Ghana still turns to foreign investors to fund critical sectors, especially energy.
Why the Energy Sector
Ghana’s energy sector is capital-hungry. As many experts explain, power plants require hundreds of millions of dollars, and renewable projects need patient, long-term financing
The country continues to rely on independent power producers (IPPs), often foreign-owned, to supplement the country’s energy needs. A situation, he says, has its own dire economic implications for the country.
Despite the situation, he reveals the striking irony that Ghanaian workers’ savings are financing government debt, while foreign capital finances Ghana’s power.
He believes the situation presents a huge opportunity for the pension funds to divert investment.
The Need for Private Consortium
Sitsofe Mensah is proposing a shift in how the pension funds are managed to benefit the country’s energy sector. He is calling for a situation where the laws allow pension funds to work together.
Instead of acting alone, Tier 2 and Tier 3 fund managers could pool resources into investment syndicates, co-finance large infrastructure projects, and share risk while unlocking scale.
In practice, this could mean five major pension funds combining a portion of their assets to finance, for instance, a 50MW solar farm in Northern Ghana or a 200MW gas-powered plant in the Volta enclave.
With this approach, he believes that what seems impossible will become achievable.
The Benefits
The IMANI analyst indicates that the implications of such a consortium will go beyond just energy financing.
He recounts that it will deepen local ownership of national assets. Instead of foreign firms dominating energy infrastructure, Ghanaians would indirectly own the power plants through their pensions.
Sitsofe also believes such projects will offer better returns for pension contributors. He says infrastructure investments typically offer long-term, stable returns, a better match for retirement funds than volatile or inflation-eroded instruments.
The Regulatory Hurdle to Cross
The biggest obstacle is not money, it is policy. Sitsofe Mensah argues that the National Pensions Regulatory Authority must evolve to introduce regulatory carve-outs for pooled investments.
It must also enable infrastructure-focused pension vehicles and provide safeguards without stifling innovation
Without these changes, billions will remain locked in low-impact investments. Instead of being passive savings waiting for retirement, he believes they must evolve to become active engines of national development.
