Debt Exchange: Former pensions regulator warns of negative impact on retirement incomes
According to data from the NPRA, the value of private pension funds in Ghana stood at GH¢28 billion (71% of the industry’s total assets under management) in 2021. Dr. Owusu-Darko argues that the DDEP, in its current form, will negatively impact these funds and erode confidence in the three-tier pensions system.
The DDEP, which is being promoted by the government, requests holders of bonds to voluntarily swap around GH¢137 billion of domestic notes and bonds for new ones with extended maturity dates. However, the programme has met with resistance from various investor groups, including individual bondholders, pension bondholders and financial analysts.
The Pensions Chamber, a representative body for pension schemes in Ghana, has also warned that the DDEP will be detrimental to the interests of contributors.
“The Pensions Chamber would like to assure contributors to pension schemes that the industry has not agreed to the Debt Exchange Programme proposed by the Ministry of Finance,” the organization stated.
Despite this, the Ghana Association of Banks (GAB) and the government have reached an agreement on the terms of participation for banks in the DDEP. The agreement includes improvements to the DDEP, such as a 5% coupon for 2023 and a single coupon rate for each of the 12 new bonds, resulting in an effective coupon rate of 9%.
However, GAB has noted that participation of its member-banks in the DDEP is subject to each individual bank’s internal governance and approval processes.
