The Director General of the Social Security and National Insurance Trust (SSNIT) Dr. John Ofori-Tenkorang says there is nothing mythical about the computation of pension benefits since pensions are a direct reflection of salaries on which contributions were made.
According to him, the salary on which one contributes is a key factor in the computation because the higher the salary on which ones contribution is made, the higher one's pension at the end of the day.
In his recent presentation, he mentioned that approximately 78% of pensioners earn a monthly pension of GHs1, 000.00 or less, approximately 71% of active members are contributing on GH₵,800 or less; 25% of active members are contributing on Ghs400.00 or less and approximately 25% of pensioners earn Ghs400.00 or less.
He added that while 50% of active members are contributing on Ghs1,000.00 or less, 50% of pensioners earn Ghs600.00 or less; and currently 4% of active members are contributing on Ghs 5,000.00 or more and 1% of pensioners earn Ghs5,000.00 or more.
“In effect, the salary on which one contributes is a key factor in the computation of pensions. Therefore, the higher the salary you contribute on, the higher your pension. With the SSNIT Pension Scheme, what you put in is what you get,” he explained.
The Director-General made this known at a regional educational forum for Members of the Trade Union Congress (TUC), to intensify its stakeholder engagements as part of the directives by the National Pensions and Regulatory Authority (NPRA) held in Bolgatanga, Upper East Region.
The SSNIT Boss emphasized that the payment of a Minimum Pension is another indicator of the generous nature of the Scheme.
“Currently, the SSNIT minimum monthly pension is GH₵300.00 and this is more than the monthly equivalent of the national daily minimum wage of GH₵287.55. The immediate observation is that SSNIT is subsidizing pensions for a group of pensioners whose salaries were woefully low when they were in active service or those contributors who decided to only contribute on a minimal salary to the scheme. The Scheme has been doing this subsidization since 2014. Even though it is not legislated, SSNIT does this as part of the social insurance nature of the Scheme,” he explained.
Mr. Ofori- Tenkorang mentioned that the SSNIT Scheme is good.
“The Scheme is generous because it gives you a life policy. This is a fact often ignored or looked over when we talk about the SSNIT Scheme. Our scheme takes care of all pre- existing conditions without a medical examination and it allows you to join all the way up to the age of 45 where certain risks are quite high. I have not quantified this, but I am sure that if you were to buy this kind of cover from a private insurance firm, the premium will be quite steep.”
He added that another factor that proves the generosity of the Scheme is the payment of Invalidity pension.
“With only 12 months of contributions within the last 36 months prior to the unfortunate incident or accident, one qualifies to receive invalidity pension for life. Currently, the Trust spends over 1 million Ghana Cedis per month on Invalidity Pensions. This is inarguably the most costly benefits payment to the Scheme due to the minimal contributions that most claimants make compared to the length of time the Trust is obligated to pay this benefit. There are several of such pensioners in this category who have been on the pension payroll for more than 20 years and yet are below the age of 60 and the Trust is obligated to pay till the good Lord calls them home.”
The Director- General of SSNIT stressed that the Trust is the only institution that guarantees Social Security benefits ranging from the Old age retirement pension, Old-Age Lump sum, Invalidity Pension and Survivor’s Benefits for a sign-on contribution amount of just 11% of a basic monthly salary.
According to him, the commercial premium that would be required to underwrite the provision of these range of benefits exceeds 11% of a basic monthly salary.
“In doing these, the Trust is mindful of the sustainability of the Scheme. External actuarial valuation has suggested that the contribution rate necessary to pay benefits over the next 50 years and to accumulate assets representing three years of total expenditure is 19.2 per cent. This is substantially higher than the current contribution rate of 11 per cent. There is therefore the need to look at the prevailing pension law governing the operations of the pension scheme. In doing this, we must consider factors such as the improvement in average life expectancy after retirement, the use of the average of the best three years’ salary and the contribution rate of 11%.”
The Trade Union Congress (TUC) in collaboration with the Social Security and National Insurance Trust (SSNIT) discussed issues related to pensions, benefit computation among others.
This followed the difficulties labor was having with the Trust over the computation of their pensions. An issue which was later referred to the NPRA for determination.
The CEO of National Pensions Regulatory Authority (NPRA), Mr Hayford Atta Krufi stated that some of the misconceptions about pensions are as a result of the lack of transparency bedeviling the Scheme as well as the lack of continuous engagements of key stakeholders of the Scheme.
He commended the Board and Management of SSNIT for their willingness and their commitment to engage organised labour to address these issues of concern.
The Deputy Secretary General of TUC, Joshua Ansah in his welcome address stated that due to the concerns raised by workers and the subsequent media attention garnered, the Congress felt it wise to bring SSNIT to engage labour and clarify any issues about the Pension Scheme.
He charged the participants to take active interest in their Social Security and retirement planning and to encourage their friends and colleagues to do same.