By: Samuel Doe. Ablordeppey
The Managing Director of asset management company Petra Trust, Mr Kofi Fynn, has said the economy will experience enhanced benefits from the current pension regime when more innovative products emerge on the market as investment instruments for fund managers.
He said since investment channels were largely restricted to treasury bills, corporate and treasury bonds and other fixed investment products, it would take innovation to develop more products which could channel pension funds to support small and medium-scale enterprises, the real estate sector and other areas that required long-term patient capital.
“Assets under management have grown significantly. Our long-term goal as fund managers is to be able to take on infrastructural projects as well as help SMEs with the needed long term funding. This is the only way we can see pension funds impacting on the economy the way we expect it to be,” Mr Fynn said in Accra Sunday.
He was interacting with the Daily Graphic shortly after Petra Trust introduced the “Savings Booster”, a tier-three investment product which promises good returns while providing tax relief to the customer in line with the National Pensions Act, 2008 (Act 766). The product entitles the customer to instruct their employers to deduct their contribution from source before tax is applied to their monthly income.
The product requires no minimum contribution and guarantees returns higher than the 91-day treasury bills.
Securities industry law
The Securities and Exchange Commission, which licenses all dealers in the securities market, is pushing for the amendment of the Securities Industry Act to remove the regulatory overlaps and make it more responsive to current developments. Among other things, the law will introduce Exchange Traded Funds such as Real Estate Investment Funds (REIFs) to improve the depth and width of Ghana’s capital market.
Mr Fynn said the industry was keenly looking out for the revised law and the new lease of life it would breathe into the industry.
“We are looking keenly at that. The investment guidelines we have today allow us to invest in Real Estate Investment Funds (REIFs) and we think this is probably going to be one of the significant areas for the fund, because it provides diversification and good returns,” he said.
The housing industry, particularly low to middle income housing market, is booming with a large deficit which requires significant investments to close. Mr Fynn said pension funds could support the housing industry in a safe way that generated the returns for clients.
About Savings Booster
“Compared to the several traditional savings products available on the market, Savings Booster, because it enables you to claw back on part of what you would have paid as income tax, starts you off in a significantly advantaged position. Even more importantly, when you compound the gains you make on these extra savings over the mid-to-long term from taxes each time your salary is paid,” he stated.
The CEO said Savings Booster would help contribute to the long-term savings pool of the country, “and by so doing help provide the much-needed mid-to-long-term investments required to transform our economy”.
Petra Trust has made the product customer friendly, providing easy tracking of savings with 24/7 access to the balance online.
SMS notifications are also sent with each credit to account and statements are emailed every quarter.
The Deputy Managing Director of Petra Trust, Mr Chris Hammond, added that the product could be used as collateral, allowing customers to secure a loan or mortgage without disrupting the growth momentum of the savings.