- New SEC Levy Risks Eroding Long-Term Pension Returns — GMA Fund Director
Ghana’s new securities levies could ultimately reduce the long-term returns earned by pension funds and other institutional investors because higher regulatory costs imposed on fund managers are likely to be passed through to clients, according to Dr Arko Akoto Ampaw, Director of the Ghana Medical Association Fund.
Dr Ampaw said the critical issue surrounding the Securities and Exchange Commission’s revised charging regime is not simply which institution is legally required to make the payment, but where the economic burden settles after asset managers adjust their pricing and fee structures. “We can see that it is us who are going to bear that cost because the players in the market are going to charge them on to us,” he said.
He was speaking during a special edition of the NorvanReports Economic Governance Platform on X Space on Sunday, August 16, 2026, hosted by Norvan Acquah-Hayford, Managing Editor of NorvanReports. The programme, held under the theme “Regulating or Overcharging? Examining SEC’s New Levies and the Future of Ghana’s Capital Market,” focused particularly on who ultimately pays when regulatory charges imposed on market operators rise sharply.
Dr Ampaw’s argument goes directly to the economic incidence of regulation because a levy can formally be charged to an investment company without remaining entirely on its balance sheet. Fund managers may absorb part of the increase through lower margins, but sustained cost increases can also influence management fees, product pricing and negotiations with institutional clients.
For pension funds, that distinction is particularly important because their investment horizons stretch across many years and the key measure of performance is not the gross return generated by a portfolio, but what remains for beneficiaries after fees and other costs have been deducted. “Our biggest concern is the net return to beneficiaries,” Dr Ampaw said. “And any time you increase such levies on the market players, they pass it on to us.”
That difference between gross and net returns is central to the debate. A fund manager may report an attractive headline performance, but management fees, custody costs, transaction expenses and regulatory charges must all be deducted before determining the return that is ultimately retained by the investor.
“When a fund manager retains earnings and says that, oh, you have 8% or even 10% returns, what does it really mean?” Dr Ampaw said. “What it actually means is that they have retained that gross, they have to take out the management fees, which we usually negotiate. Then they have to take out regulatory charges… and then the transaction costs as well.”
Large pension and institutional funds possess some bargaining power because the size of their mandates makes them commercially attractive to asset managers. That can allow them to negotiate lower management fees, but Dr Ampaw warned that sharply higher regulatory charges could weaken that leverage by giving managers less room to reduce their own fees.
“We tend to negotiate with these fund managers to reduce the management fees. And if you have a 400% increment in those regulations that they are paying to SEC, then obviously they are not going to budge when they come to negotiate how much fund management fees would cost us,” he said.
The consequence is a second-order cost that may not be immediately visible in the SEC’s levy schedule. Even where a fund manager remains responsible for making the regulatory payment, an institutional client can ultimately bear the cost when management fees remain elevated or are increased during mandate renewals.
The concern becomes more serious in a lower-return environment because fixed or recurring charges consume a larger proportion of investment income when gross returns fall. “The danger actually comes when there are low returns,” Dr Ampaw said, pointing to the asymmetry between charges that remain payable and portfolio returns that can fluctuate substantially from year to year.
That problem is particularly relevant under an asset-under-management levy because the charge can be linked to the value of assets held rather than the income those assets generate. A portfolio can therefore produce little or no return while still attracting regulatory costs.
“If let’s take hypothetical, that the fund manager did not return anything under the year, then they are actually scooping 0.225% of whatever fund it is that did not return anything,” Dr Ampaw said. “And that is where our worry is when it comes to this particular charges that has been introduced.”
For pension investors, even fractions of a percentage point matter because of compounding. Every cedi deducted from a portfolio as an additional expense is not only lost in the year the deduction occurs, but is also unavailable to generate returns in subsequent years, meaning relatively small annual charges can create meaningful differences in accumulated retirement wealth over long investment periods.
That is why institutional investors focus intensely on net returns rather than headline performance. Pension funds are designed to transform contributions made over workers’ productive years into financial security in retirement, making cost discipline as important as investment selection when assessing whether beneficiaries are receiving value.
Dr Ampaw warned that excessive deductions could ultimately undermine the purpose of collective investing. “We think that it would defeat the aim for which people bring in their funds as a collective for them to benefit in the long term,” he said.
The issue also strengthens the case for clearer fee disclosure. Dr Ampaw argued that investors should be able to see how gross investment returns are reduced by management charges, SEC levies and other regulatory or transaction costs before arriving at the final amount retained for beneficiaries.
“For that matter, a clearer disclosure of the management fee must be made, the SEC levy comes on board, and then other regulatory charges as well,” he said. Such transparency would allow institutional and retail investors to distinguish between costs retained by fund managers and charges collected on behalf of regulators, while making it easier to compare competing investment products on a true net-return basis.
For the SEC, the challenge is therefore one of balancing stronger regulatory financing against the long-term cost imposed on savers. Better-funded supervision can strengthen enforcement, improve investor protection and increase confidence in Ghana’s capital market, but those benefits could be undermined if the mechanism used to finance regulation materially reduces the attractiveness of professionally managed investments.
That trade-off is particularly important as Ghana seeks to deepen its capital market and mobilise larger pools of domestic savings for long-term investment. Dr Ampaw cautioned that the regulator must consider how its levy structure affects investor behaviour, saying: “It is imperative that now that the capital market is beginning to grow, SEC must take a position that would not frighten people from putting in their monies there.”
The debate therefore extends beyond the affordability of the levy for fund managers. For pension funds and other institutional investors, the more consequential question is how much of the additional regulatory cost eventually appears in lower net returns for beneficiaries.
Dr Ampaw’s warning is that those costs do not stop with the institution that receives the invoice. In investment management, they can travel through the financial chain and ultimately settle on the savings of workers whose long-term wealth the market is supposed to protect.
