How Pension Funds Invest in Ghana

Ghana’s pension funds have grown into one of the largest pools of domestic capital in the economy, with assets under management reaching GH¢120 billion by the first quarter of 2026 . But where exactly does this money go? The ASJ answer reveals a system that is both a pillar of stability and a source of frustration for those who want to see it fuel Ghana’s development.

The Three-Tier System

To understand how pension funds invest, you first need to understand the structure. Ghana operates a three-tier pension scheme .

Tier 1 is managed by SSNIT (Social Security and National Insurance Trust). It is mandatory for all formal sector workers and provides monthly pension payments at retirement.

Tier 2 is the occupational scheme, managed by private fund managers. It is mandatory for formal sector workers and pays a lump sum at retirement.

Tier 3 is the voluntary provident fund scheme, also managed by private fund managers. It allows workers to make additional contributions for higher retirement income.

Tier 2 is the largest component, holding about 54% of total pension assets, followed by Tier 1 at 25% and Tier 3 at 21% .

The Investment Guidelines

The National Pensions Regulatory Authority (NPRA) sets the rules for how pension funds can be invested. These guidelines are designed to protect contributors’ money through diversification and prudent risk management .

Here are the permissible asset classes and their maximum allocations:

Within each category, there are further limits. For example, no more than 5% of a fund can be invested in a single corporate issuer, and no more than 10% of any single company’s market capitalisation can be purchased .

The Reality: A Sovereign Debt Heavy Portfolio

On paper, the guidelines look diversified. In practice, the result is very different.

Over 70% of pension fund assets are invested in government securities . This includes Treasury bills, notes, bonds, and Eurobonds. The 75% cap on GoG bonds is explicit, but the concentration is even deeper than that number suggests.

The 35% allocation to bank securities (money market instruments) is largely placed with commercial banks, which in turn invest heavily in Treasury bills and other government securities . Even the 15% allocation to Collective Investment Schemes—unit trusts, mutual funds, and exchange-traded funds—ends up heavily exposed to government debt, because most of those funds hold substantial government securities as underlying assets.

The outcome, as one analysis put it, is “a pension system where diversification exists more in form than in substance” .

Why This Happened

This concentration did not happen by accident. It is the result of a regulatory framework that prioritised capital preservation above all else. Government securities were seen as the safest possible investment—backed by the sovereign, with predictable returns .

But the 2022–2023 Domestic Debt Exchange Programme (DDEP) shattered that assumption. When the government restructured GH¢31 billion of pension holdings, funds that had been considered “safe” suffered significant losses . As one NPRA official put it: “When government coughed, we all caught a cold” .

The DDEP exposed a fundamental truth: concentration in a single issuer—even the government—is not safety. It is a different kind of risk.

The Push for Diversification

The NPRA has responded by increasing the allocation for alternative investments to 25% . This was intended to diversify portfolios and create opportunities beyond government securities.

By the end of 2025, this change could make as much as GH¢25 billion available for alternative asset classes .

But pension fund managers have been slow to take up the opportunity. As of 2024, private pension exposure to alternative investments was just 1.1% of assets under management—though this was up from 0.03% in 2020 . Of that, only 0.5% of AUM was allocated to private capital asset classes like private equity, venture capital, real estate, infrastructure, and private debt.

Why the Caution?

Several factors explain the slow uptake :

• Regulatory constraints – Complex fund licensing processes make it difficult for pension funds to invest in private capital vehicles.

• Limited investable pipeline – There are not enough high-quality private investment opportunities that meet pension funds’ strict risk and return criteria.

• Data transparency gaps – Pension funds struggle to assess the performance and risk of private investment opportunities.

• Manager capacity – 89% of pension funds engage with fewer than three fund managers, limiting their exposure to diverse investment strategies.

Despite these barriers, momentum is building. A 2025 report found that 57% of pension funds have some private capital exposure, and a further 33% are seeking to make their first allocation . A separate survey found that 65% of Ghanaian pension funds intend to increase their exposure to private equity within the next five years .

Where Pension Funds Are Investing

Despite the concentration in government securities, pension funds are active across several asset classes.

Government Securities

This remains the dominant investment. Pension funds hold Treasury bills, Treasury notes, Treasury bonds, Eurobonds, and green bonds . The 2016 guidelines require that a minimum of 35% of a scheme’s investments in Government of Ghana securities be invested in long-term securities with maturities of two years or more .

Corporate Bonds and Debt

Pension funds can invest in corporate debt securities, including debentures, notes, redeemable cumulative preference shares, mortgage-backed securities, commercial paper, and infrastructure bonds . These must be investment grade and listed on an approved stock exchange, or if unlisted, privately rated .

Bank Securities

Money market instruments include fixed deposits, negotiable certificates of deposit, and bankers’ acceptances issued by banks. There are restrictions: pension funds cannot continuously roll over investments with any single bank, and cannot place more than 10% of a bank’s shareholders’ funds with that bank .

Equities

Pension funds can invest in ordinary shares and non-redeemable preference shares of listed companies. To qualify, the company must have made taxable profits and paid dividends or issued bonus shares for at least one of the five years preceding the investment.

Alternative Investments

This is the fastest-growing area of interest. Alternative investments include :

• Real Estate Investment Trusts (REITs) – Companies that own, operate, or finance income-producing properties

• Private Equity Funds – Investment pools that invest directly in companies

• Private Debt Funds – Investment pools that extend debt to privately owned companies

• Infrastructure Funds and Bonds – Financing for roads, energy, and other public infrastructure

• Project Finance – Funding for infrastructure, industrial projects, and public services using non-recourse structures

The report identified healthcare (55%), agribusiness (45%), and technology (40%) as priority sectors for pension fund investment . By asset class, 38% of respondents favour real assets such as property and infrastructure, 24% prefer private equity, and 19% are exploring venture capital .

External Investments

Pension funds are permitted to invest up to 5% of assets offshore . However, the NPRA has been cautious about allowing this, fearing it could weaken the cedi. In 2024, the regulator blocked some fund managers from increasing their offshore investments, arguing that government approval was needed.

The Impact on Ghana’s Economy

Pension funds are increasingly recognised as a critical source of long-term domestic capital for Ghana’s development.

GH¢120 billion in assets under management represents a substantial pool of capital that could finance infrastructure, support businesses, and drive economic growth .

The Bank of Ghana has noted that pension fund assets “now exceed GH¢100 billion, making them one of the largest pools of investable capital in the economy” . The central bank has launched a project to list more banks on the Ghana Stock Exchange, partly to connect this long-term domestic savings to the banking sector .

The NPRA CEO has urged companies to view stock exchange listing as a long-term partnership with investors, noting that pension funds are drawn to companies that demonstrate transparency, accountability, and a willingness to share ownership with the public .

What This Means for Ordinary Ghanaians

If you are a formal sector worker in Ghana, your Tier 2 and Tier 3 contributions are being invested by a private fund manager. The returns on those investments determine the lump sum you receive at retirement.

The concentration in government securities has delivered stable returns in normal times. But the DDEP showed that this concentration carries risk. If the government restructures its debt again, your retirement savings could be affected.

The push toward diversification—into private equity, infrastructure, and other alternative assets—is intended to reduce this risk and improve long-term returns. But it will take time, regulatory reform, and capacity building to make it happen at scale.

For now, the NPRA is strengthening its oversight through a Risk-Based Supervisory System, moving from a compliance-based approach to a more targeted, intelligence-driven framework that can identify early warning signs and take preventive action .

Quick Facts

Frequently Asked Questions

1. How do pension funds invest in Ghana?
Pension funds in Ghana invest according to guidelines set by the National Pensions Regulatory Authority (NPRA). They can invest in government securities (up to 75%), corporate bonds (35%), bank securities (35%), equities (20%), alternative investments (25%), and collective investment schemes (15%) .

2. Where do most pension funds in Ghana invest?
Over 70% of pension fund assets are invested in government securities, including Treasury bills, notes, bonds, and Eurobonds. This concentration is the result of a regulatory framework that prioritises capital preservation .

3. What happened to pension funds during the Domestic Debt Exchange Programme?
The DDEP restructured GH¢31 billion of pension holdings, causing significant losses for funds that were heavily concentrated in government securities. This exposed the risks of single-issuer concentration .

4. Can pension funds invest in private equity in Ghana?
Yes. The NPRA permits up to 25% allocation to alternative investments, including private equity. However, actual allocation remains low at 1.1% of AUM as of 2024. A 2025 report found that 65% of pension funds intend to increase their private equity exposure within five years .

5. Can pension funds invest offshore?
Pension funds are permitted to invest up to 5% of assets offshore. However, the NPRA has been cautious about allowing this, fearing it could weaken the cedi. In 2024, the regulator blocked some fund managers from increasing offshore investments .

6. What is the NPRA’s role in pension fund investment?
The NPRA sets investment guidelines, ensures prudent diversification, and supervises fund managers. It has recently deployed a Risk-Based Supervisory System to strengthen oversight and identify early warning signs .

7. What sectors are pension funds most interested in?
A 2025 report identified healthcare (55%), agribusiness (45%), and technology (40%) as priority sectors for pension fund investment. By asset class, real assets (property and infrastructure) and private equity are the most favoured .

8. How much money is in Ghana’s pension funds?
Pension assets under management reached GH¢120 billion by the first quarter of 2026, making it one of the largest pools of domestic capital in the economy

Source: Accra Street Journal 

Last Updated on September 16, 2026 by Samuel Kwame Boadu

Samuel Kwame Boadu

Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.

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