New pension law will benefit all workers - Bediako
The third tier voluntary provident fund and personal pension schemes included in the three-tier composite pension scheme would greatly benefit the 80 per cent of workers in the informal sector, Mr Thomas Angoe Bediako, Chairman of the Pension Reform Implementation Committee, said on Wednesday.
“It is pertinent to note that provision has been made in the 3rd tier Voluntary Personal Pension Scheme to cater for the peculiar needs of workers in the informal sector of the economy which covers about 80 per cent to 85 per cent of the working population,” he indicated.
Mr. Bediako explained that the reservation of the Ghana Employers' Association (GEA) that the inclusion of the third tier scheme in the National Pension Reform Bill was voluntary with an element of compulsion was not the case.
Rather that portion sought to enable the informal sector workers to voluntarily put some money aside to cater for their needs in their retirement, he said.
Briefing the media in Accra on the new Pensions Bill which has already been approved by cabinet and is awaiting passage into law by Parliament, Mr Bediako said the Presidential Commission on Pensions in consultation with other stakeholders including the GEA did a thorough job and came out with that drafted bill to benefit all Ghanaian workers both in the formal and informal sectors.
The first tier is the mandatory basic National Social Security Scheme which would incorporate an improved system of SSNIT benefits, mandatory for all employers in both private and public sector.
The second tier is occupational or work-based pension scheme, mandatory but privately managed and designed to give contributors higher lump benefits than presently available under the SSNIT or Cap 30 pension schemes.
Mr Bediako said the general benefits of the new scheme that would have a national pension regulatory authority to oversee its efficient administration would include improved qualifying conditions and survivors benefits.
He said for instance, members would contribute 15 years to qualify for SSNIT benefits instead of 20 years while survivor's benefits period would increase from 12 years to 15 years with the minimum contribution for the mandatory schemes to be based on daily minimum wage.
Mr Bediako said the Cap 30 scheme was not sustainable so it would be phased out within four years of the commencement of the new pension reform law with new entrants being banned from joining it while the Controller and Accountant-General's Department would continue to administer and pay gratuities and pensions to those who would remain on Cap 30 while it lasted.
“The ultimate aim of the Pensions Reform is that the proposed Pension Regulatory Authority will within five years after coming into effect of the new pension system, achieve unification of all pension schemes in the country.”
Mr Bediako mentioned the expected socio-economic impact of the reform as improved living standards of the elderly, secured financial autonomy and independence of retirees, increased national savings and long term funds as well as promotion of growth and development capital, mortgage and insurance markets.