The Social Security and National Insurance Trust (SSNIT) is restructuring its investment portfolio to prioritize fixed income securities and turn around non-performing assets, ensuring predictable returns and safeguarding pension payments. Director-General Kwesi Afreh Biney announced the strategic shift during a media engagement, explaining that the move aligns with the fund’s maturity phase as rising pension obligations demand more stable income flows.
Mr. Afreh Biney revealed that the Trust’s payout ratio has climbed to 86 percent, meaning that for every ten cedis received in contributions, 8.6 cedis goes directly to pension payments. This represents a dramatic increase from approximately 20 percent in the 1990s. With such a high payout ratio, the Trust must rebalance its portfolio for greater predictability and reliability.
The restructuring strategy involves unwinding underperforming unlisted investments and channeling released liquidity into the fixed income market. This approach aligns with policy guidance from the National Pensions Regulatory Authority (NPRA). Mr. Afreh Biney emphasized that the fixed income market offers the stability SSNIT needs to better plan and manage cash flows.
“When you have a scenario like that, you want some predictability so it will guide you and help you plan better. That’s the strategy,” he explained. The Director-General stressed that predictable returns are essential for meeting the Trust’s growing pension obligations to contributors.
Despite the strategic shift toward fixed income, SSNIT will continue investing in profitable listed equities. Mr. Afreh Biney noted that out of the GH¢4 billion growth in the fund’s portfolio this year, GH¢2 billion came from investments linked to the Ghana Stock Exchange. The Trust plans to increase its stake in performing companies, citing CalBank, Standard Chartered, and Ecobank as examples of potential reinvestment opportunities.
However, the Director-General acknowledged that some unlisted investments remain non-performing, necessitating an ongoing portfolio cleanup. “While we are conscious of the performance of the good ones on the stock exchange, for those which are not doing well we are looking to unwind and reallocate those resources to areas that deliver value,” he said.
The new management is focused on improving governance and enforcing accountability across SSNIT’s subsidiaries. All board members appointed to subsidiaries must sign undated resignation letters to ensure they can be removed if they fail to meet performance expectations. “We need to protect the worker whose money we hold in high respect and trust,” Mr. Afreh Biney stated.
The Trust also intends to exercise its shareholder rights more assertively in companies where it holds significant equity stakes. Mr. Afreh Biney emphasized that once SSNIT holds at least 26 percent ownership, it has blocking rights and will not hesitate to activate those rights if necessary. He stressed that strengthening oversight will prevent mismanagement of investments.
Mr. Afreh Biney, who brings experience in retail, corporate, and transaction banking, said digitalization will play a critical role in driving operational efficiency and improving returns. “To improve on the cost to sell, we’ve got to go digital. Beyond the speed digital gives us, it helps reduce cost – and the more we reduce cost, the higher our indexation will be,” he explained.
The Director-General assured contributors that their investments remain secure and the Trust is committed to improving returns, expanding coverage, and enhancing convenience. “We’ll make sure we improve the returns of investment, expand coverage, improve convenience and make all of you proud,” he said.
The restructuring marks a significant strategic shift as SSNIT adapts to its evolving financial obligations while seeking to maximize returns for contributors and maintain the long-term sustainability of Ghana’s pension system.
