Until the recent pensions reform, one of the major challenges that had confronted employees, both in the formal and informal sector, had to do with the low benefits and growth of their pension contributions as they near or go on retirement. Interestingly, a lot of well-meaning people working today forget that they would also go on retirement someday; hence the need to put in place robust retirement plans whiles in active service. It was therefore good and necessary that the Pension Act of 2008 introduced two new tiers, namely tier 2 and tier 3, to supplement the original Social Security and National Insurance Trust (SSNIT) pension scheme. Since the inception of the two-tier pension system about 10 years ago, the initiative has provided the Ghanaian worker with some great benefits, comfort and confidence. On the high level, tier 2 scheme is perceived as a mandatory defined contribution to which every employee is required to contribute 5% of their monthly income based on their gross salary. The tier 3 is also a defined contribution scheme, the difference being that it is voluntary. The decision lies with the employee and the employer to determine how much of the monthly income should be deducted as a contribution to the tier 3 scheme. Operationalization of Tier 2 and Tier 3 Pension Funds Unlike the traditional tier 1 scheme managed by SSNIT, investment decisions on tier 2 and tier 3 rather have a lot of stakeholders in the decision process; layers added to ensure private and public schemes are carefully managed and streamlined. Thankfully, the National Pension Regulatory Authority (NPRA) put in place some additional measures on the operationalization of these funds. For example, every administered/registered pension scheme must have stakeholders such as Fund Administrators, Corporate Trustees, Fund Managers, Fund Custodian and Client (Employer in the formal sector). The role of each party is spelt out and there is no ambiguity of the functions each of them is expected to perform. As outlined in the process shared below*, every investment decision must be in line with the approved directives stipulated in the NPRA guidelines. For example, a scheme`s Fund Manager cannot invest funds without the explicit approval from the Pension Trustee. We can boast of 33 corporate trustees and over 70 fund management firms. All these firms are licensed and regulated by either NPRA and/or Securities and Exchange Commission (SEC). Figure 1, Participants ensuring the safety of your pension funds The role of the Custodian Banks in Pension Fund Management Custodians are organizations mostly banks that hold securities and cash on its client's behalf and may settle trades on behalf of its clients. The custodians are less visible, but critical segment of the capital market and are characterized by its own culture and lexicon. A custodian will provide some or all of the following services, relating to holding securities in safe custody;

• Keep the securities safe from the threat of theft or loss
• Provide daily statements of securities and cash holdings
• Provide current market valuations of securities holdings
• Collect income or additional securities relating to the account holder’s entitlement
• Advise on market information concerning investment assets held under custody.

Here in Ghana, reports from the SEC shows that there are currently 16 custodian banks licensed to safe keep the tier 2 occupational pensions and tier 3 provident funds. The NPRA regulations require these sub or local custodians to be a body corporate and must be a Bank or wholly-owned subsidiary of a Bank; must have sufficient presence and control in Ghana, is independent of the approved trustee and Pension Fund Managers appointed in respect of the scheme, satisfies minimum capital requirement and net asset value determined by the Authority. The top 5 sub-custodians in Ghana provisionally from NPRA for the year ending 2017 were Standard Chartered Bank, Cal Bank, Stanbic Bank Ghana Limited, Republic Bank and Fidelity Bank with a collective Asset under Management (AUM) of Ghs7.6bn Though there are several roles played by the custodian bank stated above, their core mandate in supporting to protect the scheme funds is to:

• Receive contributions remitted by the Employer under the National Pensions Act, 2008 (Act 766) on behalf of the Trustees.
• Notify the Trustee within forty-eight hours of receiving contributions from an Employer.
• Hold pension fund and assets in trust for Members,
• Settle transactions and undertake activities related to the administration of pension fund investments including the collection of dividends and related activities;
• Undertake statistical analysis on the investments and returns on investments concerning pension funds in their custody and provide data and information to the Trustee and the Authority.

Critical responsibilities also include holding the securities in safekeeping on behalf of the account holder (trustees), holding Cash balances in safekeeping on behalf of the trustee, reporting of securities and cash positions and collection of benefits (e.g. income payment) falling due on the securities. Indeed the banking sector has gone through a lot of reforms and depositors have had their funds locked up in one form or the other. It is therefore important for each employee or individuals to ascertain the credibility from their employers, of the fund administrators, fund managers, corporate trustees and fund custodian in charge of their tiered schemed investments on the market. Equally critical is to check on the performance and status with the regulators if these service providers are in good standing or in regulatory breaches. This will help you to know if the right investment decisions are made with your funds. We don’t have to wait for the unfortunate event to happen where the regulator will appoint a ‘receiver’ to manage locked pensions as it was in the case of the banking sector, microfinance and recently Savings and Loans sector. All red flags must be raised and we the citizens must speak-up to ensure the industry keeps the current sanity.  A report sourced from Bloomberg indicates that ’the nations markets regulator is looking into whether 21 fund managers violated rules by placing their clients` money into illiquid assets. Therefore SEC has stepped up the pressure, blocking these managers from accepting new investments for fear they may use funds to pay out existing investors’’. Carl Odame-Gyenti is a third-year PhD (Financial Management) candidate, a Finance and Telecom enthusiast, managing local and global Investors, Intermediaries, Non-Bank Financial and Financial Institution relationships with an international bank in Ghana. He has embarked on several international assignments in London, Singapore, Dubai, Kenya, Nigeria and Southern African markets. He has a passion for youth and community development.