Ghana’s Pensions Industry records Significant Growth in 2023

The Pensions Industry in Ghana has recorded impressive growth, with Assets Under Management (AUM) increasing by 33.0% in 2023. The Three-Tier Pension Scheme’s AUM stood at GH¢61.8 billion by the end of December 2023, compared to GH¢46.6 billion in 2022. This surge is attributed to the government’s partial redemption of contributions and the prosecution of employers defaulting on mandatory pension schemes.

The private pension funds sector played a key role in this growth, with a 33.0% increase in pension funds in 2023, compared to a 20% increase in 2022. The Financial Stability Review attributes this growth to the alternative offer to pension funds, which saw a high participation rate of about 95.0%, and the government’s commitment to meeting its payment obligations under the offer.

The Basic National Social Security Scheme (BNSSS) also experienced significant growth. From a total AUM of GH¢12.11 billion in 2022, the year-end AUM for 2023 reached GH¢15.30 billion, primarily due to the payment of contribution arrears by the government. This represents a 26.3% increase in 2023, compared to a 4.9% increase in 2022.

The sustained growth in both private and public pension funds is attributed to better returns on investments and the prosecution of employers defaulting on Tier 2 contributions. The year-end total for private pension funds under management in 2023 was GH¢46.5 billion, compared to GH¢35.3 billion in 2022.

These shifts indicate strategic diversification in response to market conditions, positioning the pension industry for resilience and continued growth. The increase in AUM and diversification efforts highlight the sector’s commitment to adapting to economic dynamics while ensuring financial stability for policyholders.