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PUBLIC PENSION FUND MANAGEMENT

PUBLIC PENSION FUND MANAGEMENT. GHANA SOCIAL SECURITY & NATIONAL INSURANCE TRUST (SSNIT). PRESENTATION PREVIEW. INTRODUCTION ACTUARIAL EVALUATION INVESTMENT POLICY INVESTMENT MODEL DEVELOPMENT ORIENTED INVESMENTS MANAGEMENT. 1.0 INTRODUCTION. 1.10 Traditional Social Security

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PUBLIC PENSION FUND MANAGEMENT

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  1. PUBLIC PENSION FUND MANAGEMENT GHANA SOCIAL SECURITY & NATIONAL INSURANCE TRUST (SSNIT)

  2. PRESENTATION PREVIEW • INTRODUCTION • ACTUARIAL EVALUATION • INVESTMENT POLICY • INVESTMENT MODEL • DEVELOPMENT ORIENTED INVESMENTS • MANAGEMENT

  3. 1.0INTRODUCTION • 1.10 Traditional Social Security • 1.20 Modern Social Security

  4. 2.0 INSTITUTION(SSNIT) • 2.10 Institutional History • 2.20 Transformation • 2.30 Scheme Details

  5. 2.30 Scheme Details • Scaled Premium Scheme • Coverage…..All Workers • Contributions: • 5% By Employee • 12.5% By Employer • Qualifying Conditions: • Minimum of 240 months Contributions • Pension from Age 55 upwards

  6. 2.30 Scheme Details (cont) • Benefits: • Old Age Pension • Invalidity Pension • Death & Survivors Payment • Indexation • Yearly increases • Percentage Increase in Previous year’s Contribution Inflow

  7. 3.0 ACTUARIAL PROJECTIONS • Demographic (population distribution, growth rates, life expectancy) • Economic (economic growth data projections, inflation ) • Programmatic (operational & administrative experience for SSNIT over years)

  8. 3.30 COSTS COMPOSITION(as % of insured earnings)

  9. 3.40 COSTS/REVENUES (as % of insured earnings)

  10. INSTITUTIONAL ACTIVITIES CONTRIBUTIONS ACTIVITIES SSNIT INVESTMENT ACTIVITIES BENEFITS ACTIVITIES

  11. 3.41 FUNDS BUILD UP

  12. 3.50 FUND RATIO

  13. 3.60 DEDUCTIONS FROM ACTUARIAL ANALYSIS • NO LIQUIDITY PROBLEMS IN THE EARLY YEARS • LONG TERM INVESTMENTS COULD BE CONTAINED • To ensure safety of investments • To generate higher returns in the future. • To provide capital appreciation. • OTHER IMPLICATIONS FOR PENSION SCHEME • Benefits & Contributions adjustments in future • Effects of HIV/AIDS epidemic

  14. 4.0 INVESTMENT POLICY • TWO MAJOR OBJECTIVES ARE: • The need to maintain financial viability of the scheme. • The need to provide investments, which are development oriented and contribute to the national good.

  15. 4.20 FINANCIAL VIABILITY • Achievement of: • Positive rates of return on investment • Maintaining optimum Fund Ratio • Through : • Ensuring SAFETY of selected investments • Ensuring adequate YIELD. • Ensuring LIQUIDITY to meet all obligations. • Ensuring DIVERSIFICATION of the portfolio

  16. 4.20 DEVELOPMENT ORIENTED INVESTMENTS • Low level of developing country economies • Basic requirements of developing countries • Formulation of interventions • Schemes with adequate return on investment • Interventions that create sustainable institutions • Housing Finance Scheme • Students Loan Scheme. • Industrial Estates

  17. FIXED INCOME INVESTMENTS Investments with predetermined or known returns at the time of making the investment. NON FIXED INCOME INVESTMENTS These investments have variable returns have capital appreciation advantage developmental in nature 5.0 FINANCIAL VIABILITY

  18. 5.1FIXED INCOME TREASURY BILLS FIXED DEPOSITS BONDS BANK DEPOSITS CORPORATE LOANS 5.2NON FIXED INC. EQUITIES: LISTED & UNLISTED. PROPERTIES:BOTH COMMERCIAL& RESIDENTIAL. SPECIAL DEVELOPMENT SCHEMES 5.10 PORTFOLIO MIX

  19. 5.11Treasury Bill Rates & Inflation

  20. 5.2 GSE Returns & Inflation

  21. 6.0 INVESTMENT MODEL • OBJECTIVE OF THE MODEL: • SET UP A WORKABLE SYSTEM • ELIMINATE/REDUCE HUMAN FACTORS • ALLOW FOR SIMULATION OF OPTIONS

  22. 6.10 MODEL FORMULATION • ASSUMING THE PRE-FIXED LEVEL OF RETURN ABOVE INFLATION FROM ACTUARIAL ANALYSIS • THE MODEL SIMULATES THE RATIO OF FI/NFI TO ATTAIN THE GIVEN RETURN USING FORMULA BELOW

  23. 6.11 MODEL FORMULA

  24. 6.12 MODEL FORMULA

  25. 6.13 MODEL FORMULA

  26. 6.14 ASSET ALLOCATION SPREADSHEET

  27. 6.20 PORTFOLIO MIX RESULTS

  28. 6.21 PORTFOLIO MIX TREND

  29. 6.23 RETURN ON INVESTMENTS

  30. 6.24 RETURN BY ASSET CLASS

  31. 7.14 GDP/CAPITA

  32. 7.0 SSA COUNTRY DATA & PRIORITIES • POPULATION GROWTH RATES • LIFE EXPECTANCY • GDP/CAPITA • PRIORITIES FOR DEVELOPMENT ORIENTED INVESTMENTS

  33. 6.25 ASSET ALLOCATION

  34. 7.12 LIFE EXPECTANCY(SSA)

  35. 7.13 LIFE EXPECTANCY COMPARISONS

  36. 7.11 Population Growth Rates (SSA)

  37. 7.15 GDP/Capita Comparisons

  38. BASIC NEEDS HEALTH SERVICES HOUSING DEV. EDUCATION FOOD PRODUCTION INFRASTRUCTURE WATER SUPPLY TRANSPORT INFRA. ELECTRICITY TELECOMS 7.20 DEVELOPING COUNTRY PRIORITIES

  39. 7.30 METHODOLOGY & APPROACH • DIALOGUE WITH GOVERNMENT TO SELECT PRIORITIES • SECTORS THAT CAN BE COMMERCIALISED • CREATE SUSTAINABLE INSTITUTIONS • SPIN-OFF AND INVOLVE PRIVATE SECTOR

  40. 7.40 HOME FINANCE SCHEME

  41. 7.50 STUDENTS LOAN SCHEME Loan

  42. 7.60 INDUSTRIAL ESTATES • SMALL SCALE MANUFACTURING • DIVERSIFICATION OF ECONOMY • JOB CREATION • GROWTH IN THE SOCIAL SECURITY POPULATION

  43. 8.0 MANAGEMENT • INTERNAL MANAGEMENT SYSTEMS • EXTERNAL POLITICAL PRESSURES • GENERAL PUBLIC PERCEPTION

  44. 8.10 INTERNAL MANAGEMENT • GUIDELINES FOR REGULAR ACTUARIAL REVIEWS • FORMULATE INVESTMENT POLICY • INVESTMENT MODEL • INVESTMENT ANALYSIS PROCESS • MONITORING OF INVESTMENTS

  45. 8.20 EXTERNAL POLITICAL PRESSURES • INITIATE DIALOGUE WITH POLITICAL LEADERS • EDUCATE GOVERNMENT OFFICIALS • DEMAND INDEPENDENT/REPRESENTATIVE BOARD • REGULAR REPORTING SYSTEM

  46. 8.30 GENERAL PUBLIC • TRAIN STAFF FOR PUBLIC EDUCATION • MEET OPINION LEADERS REGULARLY • WORKSHOP FOR MEDIA PERSONNEL • GENERAL PUBLIC EDUCATION THROUGH MEDIA • PUBLISH ANNUAL REPORTS IN PRESS

  47. 9.0 SUMMARY • REGULAR ACTUARIAL REVIEWS • INVESTMENT POLICY FORMULATION • DEVELOP INVESTMENT MODEL • DEVELOPMENT ORIENTED INVESTMENTS • MANAGEMENT PRESSURES

  48. 10.0 CONCLUDING QUOTES • “Thinking is the hardest work there is, which is probably the reason why so few engage in it”…….Henry Ford • “If everyone is thinking alike, then somebody is not thinking”…G. Patton. • “The only man who never makes a mistake is the man who never does anything”……… T. Roosevelt.

  49. CONCLUDING QUOTES…. • “ Even if you are on the right track, you will get run over if you just sit there”…. W Rogers • “ She did not know it could not be done , so she went ahead and did it.” .…..Mary’s Almanac

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