The Analysis of a Pension Fund Allocation and its Impact on the Economy of Ghana

Abstract

Many governments in many countries pay a great attention to pension schemes.  Pension schemes play a large role in the development of the economy.  This work is to examine the extent to which a pension fund has influenced the Ghanaian economy.

The data for the research used was eight consecutive years of data, the data was basically a secondary data. The descriptive aspect of the research employed summary tables.  The Lorenz curve, Gini-Coefficient and logarithmic linear regression analyses were the major inferential statistical tools employed for the research.

The results of the research revealed that the level of contribution, benefits paid and the total assets under the management of the scheme experienced an upward trend but the growth rate has been erratic.  There are also enough funds for payment of pensions when due but there are disparities between pensioners.  The analysis also revealed that the pension fund invest in three portfolios these are fixed income, equity (both listed and unlisted) and alternatives (real estate and economic target investment).  It was found that among the three investment portfolios only fixed income has a significant impact on the scheme investment income, the other portfolios have a positive impact on the growth of the economy.

The researcher recommends that the management of the funds should review the pension paid so as to improve the financial security of the pensioner. The researcher suggests that funds which bring about lower returns of public portfolios should be avoided.

Keywords: Pension schemes, Ghanaian economy, eight consecutive years of data, Lorenz curve Gini-Coefficient, Logarithmic linear regression, fixed income, Equity, Alternative