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Mr. Romeo Bugyei, CEO IT Consortium
Mr. Romeo Bugyei, CEO IT Consortium

Digital pensions market needs to be more attractive – Fintechs to Regulator

Financial technology firms (fintechs) are best positioned to bridge the gap that would make pensions available to the informal sector. However delivery cost has been a major impediment to undertaken such initiative.

In 2018, Ghana’s mobile market comprised about 34.57 million subscribers translating to a penetration rate of 119 percent. In this light, Fintechs in Ghana have called on regulatory bodies to put in place measures that would further enable access to pensions by the informal sector through Tier Three Schemes.

The number of people actively contributing to pension schemes has relatively been few, particularly in the informal sector. The active membership on the Social Security and National Insurance Trust (SSNIT), stood at 1,353,610 as at 31 December 2016.

In an interview with Goldstreet Business, the Chief Executive Officer (CEO) of IT Consortium Limited, Mr. Romeo Bugyei indicated that the cost involved in operating within the sector was prohibitively high, explaining that for recurrent payments, lower end payments tend to cost more because of the way technology is set up.

“FinTechs run recurrent costs regardless of whether a transaction goes through or not. We need to push informal pensions whether it is to a farmer, house help or market woman and that makes it difficult,” he said.

By 2020, it is projected that Ghana’s mobile penetration is going to hit above 130 percent, while subscription is expected to hit about 40 million.

Total Assets under management, including pension funds and collective investment schemes, increased from GHc 31.1 billion at the end of December 2017 to GHc 35.7 billion at end of June 2018, representing an increase of 15 percent.

“If the regulator can come in with a specific fee for our channels, it will help a lot,” he suggested.

Last year, IT Consortium, in collaboration with MTN Ghana and United Pensions Trustees introduced ‘My Own Pension’ (MOP), a Mobile Money driven pension’s platform, the first of its kind in Ghana and Africa.

The MOP is a three-tier pension scheme tailored to resolve the problem of financial insecurity among pensioners. It is aimed at providing Ghanaians, especially, those in the informal sector, a simple and convenient way to save and make voluntary pension contributions.

Pension funds under the Three-Tier Scheme have seen significant growth over the past few years. In 2017, total assets reached about GHc 20.8 billion, representing about 32 percent annual growth over the previous year. Total assets at the end of 2018 were projected to exceed GHc 25 billion.

 

Source: Goldstreetbusiness.com

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