An estimated 12 million people in the informal sector of the economy are without any form of pension, a situation that leads to loss of income in retirement and perpetuates old age poverty, Samuel Walterberg, CEO of People's Pension Trust has said.

Though the informal sector accounts for 85 percent of the World Bank estimated 13.5million labour force, not much has been done over the years to secure their future income post-retirement--despite the reforms and the introduction of the three-tier pension scheme.

The current three-tier pension system, enacted into law in 2008, demands employers to register their staff under a first-tier basic pension scheme managed by Social Security and National Insurance Trust (SSNIT).

The second-tier work-based scheme is privately managed and is expected to give contributors higher lump sum benefits than presently available under the SSNIT.

The third-tier is voluntary and includes provident funds and personal pension schemes.

The reforms, which ended the monopoly of SSNIT, were hailed as a major step toward improving the retirement conditions of workers through competition that will maximise the returns earned on pension investments; however, the informal sector has remained relatively untouched.

"Trust is an issue, accessibility of pension and then collection are some concerns of informal sector operators," Mr. Walterberg told the B&FT on the sidelines of the official signing ceremony for new informal-sector focused pension product christened "Pension For All”.

The Pension for All scheme is made possible by People's Pension Trust, a trustee licensed by the National Pensions Regulatory Authority, Vodafone Ghana, operators of Vodafone Cash, and Dusk Capital, licensed fund managers.

The scheme is designed to provide all Ghanaian workers the opportunity to save money towards a secured and more fulfilling future by making voluntary contributions through Vodafone cash.

Explaining the modalities for the new pension scheme, Mr Walterberg said: "You have to sign on to Vodafone Cash, and then you register on People's Pension for All after which you can start to pay. So, you decide how much and when you want to pay," he said, adding, "after payment we also give you access to check your account to see if we have received your money and the investment to be done with your money."

Bernard Osei-Tutu, CEO of Dusk Capital, the fund managers under the Scheme, said “although informal sector operators want to save, they don’t know who to give their monies to and with the issues that surround micro finance, trust is on the minimal therefore this initiative is a way to build trust for the people because despite everything, we are in collaboration with the NPRA."

Martison Obeng Adjei of Vodafone Cash noted that the partnership was made to deepen financial inclusion. “This partnership means that we will use our platform to collect contributions on behalf of People’s Pension Trust and disburse payments to customers as and when they’re due and also to ensure that they have the security of getting their monies as and when they’re due for them”.

Ghana's private pension funds made up of Asset Under Management and the Temporary Pension Fund Account rose to GH¢4.7 billion as at close of 2015, representing 3.3 percent of the country’s GDP, data from the National Pensions Regulatory Authority (NPRA) has shown.

The 2015 total private pension fund grew by more than 480 percent of the amount recorded in 2012, when it was GH¢805 million – about 1 percent of the country’s GDP.

The roping in of the informal sector will also ensure the availability of funds for investment into key sectors of the economy