Special Pension Scheme For The Informal Sector

Farmers, fishermen, tailors, hairdressers, market women and traders as well as drivers and other self-employed Ghanaians can now participate in a pension scheme which will ensure that workers in the informal sector, like their counterpart in the formal sector, also receive monthly pensions as well as access a lump sum which will take care of them in their old age.

This provision has been made in the third-tier Voluntary Personal Pension Scheme of the new scheme to cater for the peculiar needs of workers in the informal sector of the economy who constitute about 85 per cent of the work force in the country.

The Chairman for the Pension Regulatory Board, Mr. Richard Kwame Asante, made this known in Accra, on Thursday 10th December, when he briefed the press about the Pensions Regulatory Authority's Plan for the implementation of the New Pensions Scheme (NPS) which commences in January, 2010.

The new contributory three-tier pension scheme, according to Mr. Asante, comprises two mandatory and a voluntary scheme. He noted that the first is the first-tier basic national social security scheme which is mandatory for all employees in both the private and public sectors and optional for the self employed which will pay only monthly pensions and related benefits such as survivals and invalidity benefits.

He added that the second is a mandatory occupational or work-based pension scheme which will be privately managed and mainly pay lump sum benefits whiles the third tier is a voluntary provident fund and personal pension schemes, supported by tax benefit incentives to provide additional funds for workers who want to make voluntary contributions to enhance their pension benefits in addition to workers in the informal sector who are not catered for by the first two mandatory schemes.

Mr. Asante pointed out that the first-tier basic national social security scheme will be managed by the Social Security National Insurance Trust (SSNIT) which is currently undergoing restructuring to strengthen operations whiles the mandatory second-tier and the voluntary third tier schemes will be privately managed by trustees licensed by the Pensions Regulatory Authority (PRA) with the assistance of pension fund managers and custodians registered by the authority.  

The new scheme, he explains, allows workers to use their future lump sum benefits as collateral to secure mortgages for their private residence before attaining their pension age, a situation which will have a positive impact on the economy. “It will also ensure improved living standards of the elderly, financial autonomy and independence of retirees as well as the promotion of growth and development of the capital, mortgage and insurance market”.

The Chairman also presented the Implementation Time Table and Guidelines for transitional arrangements for the mandatory contributions as well as the educational and awareness campaign programmes.