Corporate Governance and Financial Risk Management in Ghana’s Pension Industry: A Comparative Analysis of Public and Private Schemes

Abstract

The pension industry in Ghana is facing numerous challenges, including poor investment returns, market volatility, and inadequate corporate governance practices. This study assessed corporate governance and financial risk management in Ghana's pension industry, with a specific focus on analysing public and private employer-sponsored pension schemes. Data were obtained from pension fund managers, investment officers, risk managers, trustees, and investment committee members of both public and private employer-sponsored pension schemes. The population consists of 225 pension schemes in Ghana, comprising both public and private employer-sponsored schemes of which a sample size of 145 was ascertained for the study. A quantitative research approach was employed to assess the impact of corporate governance on financial risk management in Ghana's pension industry. The questionnaire collected quantitative data using Likert scales. The Likert-scale questions assess respondents' views on corporate governance and financial risk management. The findings suggest that corporate governance has a significant positive impact on financial risk management and that public employer-sponsored pension schemes exhibit stronger governance practices compared to private employer-sponsored pension schemes. The study recommends that regulators establish robust corporate governance standards, conduct regular assessments, and consider adopting governance structures in public employer-sponsored pension schemes as a model for the industry. Additionally, pension scheme trustees and managers should prioritize corporate governance practices, and industry stakeholders should develop a code of conduct for pension scheme governance. The study's findings and recommendations aim to improve the governance and sustainability of pension schemes in Ghana, ultimately protecting the interests of pension fund members and beneficiaries.