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

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

4. 1.0 INTRODUCTION 1.10 Traditional Social Security 1.20 Modern Social Security

5. 2.0 INSTITUTION (SSNIT) 2.10 Institutional History 2.20 Transformation 2.30 Scheme Details

6. 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

7. 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

8. 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)

9. 3.30 COSTS COMPOSITION (as % of insured earnings)

10. 3.40 COSTS/REVENUES (as % of insured earnings)

11. CONTRIBUTIONS ACTIVITIES SSNIT BENEFITS ACTIVITIES INVESTMENT ACTIVITIES INSTITUTIONAL ACTIVITIES

12. 3.41 FUNDS BUILD UP

13. 3.50 FUND RATIO

14. 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

15. 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.

16. 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

17. 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

18. 5.0 FINANCIAL VIABILITY 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

19. 5.10 PORTFOLIO MIX 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

20. 5.11Treasury Bill Rates & Inflation

21. 5.2 GSE Returns & Inflation

22. 6.0 INVESTMENT MODEL OBJECTIVE OF THE MODEL: –SET UP A WORKABLE SYSTEM –ELIMINATE/REDUCE HUMAN FACTORS –ALLOW FOR SIMULATION OF OPTIONS

23. 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

24. 6.11 MODEL FORMULA

25. 6.12 MODEL FORMULA

26. 6.13 MODEL FORMULA

27. 6.14 ASSET ALLOCATION SPREADSHEET

28. 6.20 PORTFOLIO MIX RESULTS

29. 6.21 PORTFOLIO MIX TREND

30. 6.23 RETURN ON INVESTMENTS

31. 6.24 RETURN BY ASSET CLASS

32. 7.14 GDP/CAPITA

33. 7.0 SSA COUNTRY DATA & PRIORITIES POPULATION GROWTH RATES LIFE EXPECTANCY GDP/CAPITA PRIORITIES FOR DEVELOPMENT ORIENTED INVESTMENTS

34. 6.25 ASSET ALLOCATION

35. 7.12 LIFE EXPECTANCY (SSA)

36. 7.13 LIFE EXPECTANCY COMPARISONS

37. 7.11 Population Growth Rates (SSA)

38. 7.15 GDP/Capita Comparisons

39. 7.20 DEVELOPING COUNTRY PRIORITIES BASIC NEEDS –HEALTH SERVICES –HOUSING DEV. –EDUCATION –FOOD PRODUCTION INFRASTRUCTURE –WATER SUPPLY –TRANSPORT INFRA. –ELECTRICITY –TELECOMS

40. 7.30 METHODOLOGY & APPROACH DIALOGUE WITH GOVERNMENT TO SELECT PRIORITIES –SECTORS THAT CAN BE COMMERCIALISED –CREATE SUSTAINABLE INSTITUTIONS –SPIN-OFF AND INVOLVE PRIVATE SECTOR

41. 7.40 HOME FINANCE SCHEME

42. 7.50 STUDENTS LOAN SCHEME Loan

43. 7.60 INDUSTRIAL ESTATES SMALL SCALE MANUFACTURING DIVERSIFICATION OF ECONOMY JOB CREATION GROWTH IN THE SOCIAL SECURITY POPULATION

44. 8.0 MANAGEMENT INTERNAL MANAGEMENT SYSTEMS EXTERNAL POLITICAL PRESSURES GENERAL PUBLIC PERCEPTION

45. 8.10 INTERNAL MANAGEMENT GUIDELINES FOR REGULAR ACTUARIAL REVIEWS FORMULATE INVESTMENT POLICY INVESTMENT MODEL INVESTMENT ANALYSIS PROCESS MONITORING OF INVESTMENTS

46. 8.20 EXTERNAL POLITICAL PRESSURES INITIATE DIALOGUE WITH POLITICAL LEADERS EDUCATE GOVERNMENT OFFICIALS DEMAND INDEPENDENT/REPRESENTATIVE BOARD REGULAR REPORTING SYSTEM

47. 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

48. 9.0 SUMMARY REGULAR ACTUARIAL REVIEWS INVESTMENT POLICY FORMULATION DEVELOP INVESTMENT MODEL DEVELOPMENT ORIENTED INVESTMENTS MANAGEMENT PRESSURES

49. 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.

50. 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