The Chief Executive Officer of the Private Sector Federation, Nana Osei Bonsu, has issued a strong call for urgent reforms to Ghana’s third-tier pension system, warning that the current structure is failing to deliver the long-term capital needed to drive private sector growth and job creation.
Mr. Osei Bonsu argued that the third-tier scheme, which was originally designed to boost private investment through pension-backed financing, has been diverted from its intended purpose.
“We now have a three-tier pension scheme, but we’re not accumulating enough capital for the private sector, the cost of credit is high. Access to adequate capital is very low. Capital formation is difficult,” he said during Joy News’ PM Express.
The third-tier system is the voluntary component of Ghana’s national pension architecture. It was created to encourage long-term savings and provide an additional pool of capital outside the mandatory first and second tiers.
According to Mr. Osei Bonsu, the system was meant to channel significant investment into productive private ventures, but the reality has fallen far short.
“Roughly 35% to 36% of the pension pool is held outside the public sector, but instead of flowing into private sector projects, much of that capital is being locked up in treasury bills and government bonds. That’s not what the third tier was designed for,” he explained.
He emphasized that when pension funds are overly concentrated in government securities, they fail to support businesses that urgently need affordable, long-term financing to expand, innovate, and create jobs.
To reverse this trend, Mr. Osei Bonsu called for greater participation in the voluntary third-tier scheme by all stakeholders, government, employers, and workers.
Increased participation, he argued, would grow the capital base available for private sector investments and reduce Ghana’s reliance on expensive commercial loans.
“We need full participation. The more people contribute, the more capital we can allocate to business development, that long-term portion of pension savings and those 30-year resources should be invested in the private sector,” he said.
He added that with a stronger pension-backed capital pool, private enterprises would face less competition for funding, which would naturally lead to lower borrowing costs across the economy.
“If we get to a point where there’s so much capital available that investors are scrambling to find viable business projects, interest rates will fall on their own,” he explained.
Mr. Osei Bonsu’s remarks come amid ongoing concerns about the high cost of borrowing in Ghana, which continues to stifle small and medium-sized enterprises (SMEs) despite the country’s modest macroeconomic recovery.
