Pensions schemes reforms

• Posted by GAFM AFRICA October 10, 2017 - Filed in Business - #pension  #analyst  - 1,223 views

  An increasing number of African countries have recently initiated reform of their pension systems and are beginning to adopt diversified approaches to pension provision in order to strengthen retirement security of their workforce. Many other authorities are in the process of formulating serious reform proposals and are exploring ways to encourage more saving over the long run

  According to a report by

  Amadou Sy a Nonresident Senior Fellow - Global Economy and Development, Africa

  Growth Initiative*, pension reform is not sufficient for pension funds to be

  successful in their investments. He maintains that a supportive economic

  environment, with strong monetary and fiscal policy as well as a growing

  private sector, is necessary for pension fund investment in infrastructure. At

  the same time, African countries must develop domestic financial and capital

  market instruments for infrastructure; asset availability and allocation on

  their own are not enough.

  He further goes to give

  reforms that he believes will change the outlook and running of these pension

  fund schemes for them to achieve their vision and to enable them to fund

  government projects. First, pension reform driven by strong political

  leadership and ownership by all stakeholders can help improve the performance

  of African pension systems and develop pension assets. However, these pension

  reforms should be carefully designed so as to learn from the lessons of the

  mixed results of earlier experiences in Latin America, notably in Chile, as

  well as in Central and Eastern European countries.

  Second, improvements to the

  governance, regulation, and supervision of pension funds can help pension funds

  invest in infrastructure in a manner consistent with their primary goal of

  ensuring old-age income security.

  Third, even when sufficient

  pension assets are available and asset allocation to infrastructure investments

  is made, African countries will still need to develop domestic financial and

  capital market instruments for infrastructure investment.

  Finally, given the large scale

  of infrastructure investment, African countries will need to consider the net

  benefits of complementing domestic pension assets with foreign and multilateral

  investments through co-financing and innovative policies.

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