Addressing Challenges in Pension Inclusion through KYC Framework
The workshop on leveraging switches for pension inclusion in Accra, Ghana highlighted the need for a simplified KYC framework to address issues such as lack of data on potential pensioners, ghost payments, and identity discrepancies. With insights on the NIS Project, Ghana Card, and NIR database utilization, the presentation emphasized the importance of streamlining administrative data and increasing interoperability to enhance pension management and enrolment.
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ESTABLISHING A SIMPLIFIED KYC ESTABLISHING A SIMPLIFIED KYC FRAMEWORK FRAMEWORK WORKSHOP ON LEVERAGING SWITCHES FOR PENSION INCLUSION ACCRA, GHANA Derick Oppong-Agyare National Identification Authority 3rdJuly, 2019
Presentation Outline Presentation Outline Overview of the pension space Pension enrolment to date The case for a KYC framework What KYC can achieve The NIS Project Some features of the Ghana Card Ghana Card the legal framework Harvesting the NIR database for KYC purposes Going forward Food for thought
OVERVIEW OF THE PENSION SPACE OVERVIEW OF THE PENSION SPACE Lack of data of potential pensioners in the informal sector. A change of maiden name, even after publication in the Gazette, is no guarantee, in some cases, that the requested change will be effected and one s pension benefits will be received, due to unstructured or uncoordinated systems to update and streamline administrative data. Government salaries and pensions are sometimes paid to ghosts without detection.
OVERVIEW OF THE PENSION SPACE OVERVIEW OF THE PENSION SPACE The true identities of three or four separate beneficiaries bearing the same names could cost money and time to rectify. People misrepresent their dates of birth and depose to affidavits to support such misrepresentations. This can affect computation of pensions. Different government agencies run databases which operate as uncoordinated data silos. E.g. NPRA? SSNIT? Insurance companies?
OVERVIEW OF THE PENSION SPACE OVERVIEW OF THE PENSION SPACE Lack of resources to leverage technology and automation to manage pensions. Inability to simplify enrolment procedures and, thereby increasing marketing and client enrolment costs. Lack of interoperability among the Telcos to facilitate tracking
PENSION ENROLMENT TO DATE PENSION ENROLMENT TO DATE Target 9,200,000 Total contributors 1,427,137 (as at 31st December 2018) Percentage enrolment 15.51% Unreached - 7,772,863 (what strategies to adopt?) Source: NPRA
THE CASE FOR A KYC FRAMEWORK THE CASE FOR A KYC FRAMEWORK A robust KYC framework will: assist in managing existing pensioners; and managing pensions in way that can boost pension enrolment.
WHAT KYC CAN ACHIEVE WHAT KYC CAN ACHIEVE Validation of existing/current pensioners - could be carried out periodically without investing significant funds. Access to NIA web portal, a database of the age of pensioners, and data from the Birth and Death Registry will facilitate this. Elimination of ghost payments a validation of the register of pensions will assist in mitigating ghost and/or fraudulent payments. Verification of fresh and portable applicants data about names, ages, residential addresses and telephone numbers of applicants are needed to effectively administer and manage pensions.Use of NIA data to verify biometric client identifications to authenticate declarations or representations.
WHAT KYC CAN ACHIEVE WHAT KYC CAN ACHIEVE Boosting pension enrolment an interrogation of the NIR database can reveal potential pensioners especially those within the informal sector. Verify pension payments to beneficiaries. Ascertain the existence of beneficiaries or trustees by verifying data from the NIR database. Assessment of beneficiary needs could lead to development of new social protection services. Data analytics can lead to better planning and decision making.
HOW DOES GHANA INTEND SOLVING THESE TEEMING CHALLENGES? CAN KYC RESOLVE THESE CHALLENGES?
THE NATIONAL IDENTIFICATION SYSTEM (NIS) PROJECT THE NATIONAL IDENTIFICATION SYSTEM (NIS) PROJECT The 3 components of the NIS are to: Compile a credible National Identity Register (NIR) with biometric verification functionalities; Issue Ghana Cards to eligible Ghanaians and Foreigners; and Harmonize and integrate existing data silos and thereby eliminate duplication of efforts and waste of national resources by public and private agencies.
SOME FEATURES OF THE GHANA CARD SOME FEATURES OF THE GHANA CARD Dual-interface smart card with a 148 K chip to enhance transactions. 14 applets to house different categories transactions E.g. pensions, taxes, SIM registrations, etc.. 10,000 transaction swipes within the 10-year duration. 4-5 seconds duration per verification. The chip embedded in the Ghana Card will house transaction data which can be analysed and used to promote economic, social and political activities. Pension management costs will reduce.
GHANA CARD GHANA CARD THE LEGAL FRAMEWORK THE LEGAL FRAMEWORK Regulation 7 (1) of National Identity Register Regulations, 2012 (L.I. 2111) on the Mandatory uses of the national identity card imposes a statutory duty on all organisations to use the Ghana Card. It states: 7 (1) a national identity card issued to an individual shall be used for the following transactions where identity is required: f) transactions pertaining to individuals in respect of pension; h) transactions that have socialsecurity implications;
HARVESTING THE NIR DATABASE FOR KYC PURPOSES HARVESTING THE NIR DATABASE FOR KYC PURPOSES NPRA can research the needs of its target market and interpret data to develop different products offerings. NPRA, Corporate trusteeships, Pension Fund Custodians, Pension Fund Managers, Provident Fund Managers, Personal Pension Scheme Managers can, at a fee, procure from NIA: the actual number of Ghanaians who should potentially be on pensions; the names, ages, residential addresses and registered telephone numbers of potential pensioners; and biometric verification services for all potential pensioners. Use data to design a KYC framework to market pensions at relatively reduced market and technology costs.
GOING FORWARD GOING FORWARD The Ghana Card will house sufficient information to underpin any KYC framework. This will boost pension enrolment. A Ghanaian child in the most remote hut, possessing a Ghana Card with a PIN that could serve as a birth certificate number, welfare access number, insurance number, tax identification number, pension number, health insurance number etc. would enhance social transactions such as pensions. NPRA, SSNIT and other stakeholders should collaborate with NIA to develop and agree verification protocols and other standards.
FOOD FOR THOUGHT FOOD FOR THOUGHT Can we utilize data from the NIR to develop the KYC framework and grow the pension market so as to close the current deficit within 5 years? Can we design a salad of social protection services for pensioners that will attract and boost enrolment? Can data be used to manage pensions with a banking and investment approach?
