NPRA resolves headache of retiring workers

Business News of Tuesday, 17 February 2015

Source: Graphic Online

Haruna Iddrisu Concerned

The National Pensions Regulatory Authority (NPRA) says workers who will retire this year are exempted from the second tier Occupational Pension Scheme.

The assurance is to put to rest concerns by workers who fall within the category (retiring by the end of this year) that their contributions to the tier-two pensions scheme will not be computed due to operational challenges, which will make them worse off.

The Director of Regulations at the NPRA, Mr Ernest Amartey-Vondee, explained that workers who would retire this year, and who had contributed to the tier-two scheme, would have their contributions transferred to the Social Security and National Insurance Trust (SSNIT) and paid as a lump benefit after retirement.

He said the recent amendment to the National Pensions law was to correct all anomalies that may arise in the computation of the retirement benefit for workers.

Quoting the amended portions of the National Pensions Act, 2008 (Act 766), Mr Amartey-Vondee said workers who were 55 years in 2010 when the Pensions Act came into force and would retire in 2015 had been exempted from the occupational pension scheme and the new age revised to 50 years and above, who were now exempted from the scheme.

“The intent of the Act was not to make pensioners worse off but to improve their retirement benefits,” he said.

There was initial controversy over the fate of salaried workers who were below 55 years in 2010 following the inability of SSNIT and NPRA to reach a consensus on the formula to use in paying them their pass credit.

The pass credit is a worker’s total contributions to SSNIT and the accrued benefits prior to the coming into force of the National Pensions Act, 2008, (Act 766). The due payment date is crucial because it will determine the lump sum a worker will take home upon retirement.

The authority, which regulates the pensions industry, said it had engaged a team of consultants to help find an amicable solution to the matter.

Prior to the amendment of the Pension Act, people who were 55 years and above were made to stay with the old scheme, which meant that SSNIT would pay their lump sum as well as monthly pensions after they had gone on retirement.

However, those who were 55 years and below were migrated onto the new scheme, where their monthly five per cent contribution is currently lodged in a Temporary Pensions Fund Account (TPFA) at the Bank of Ghana (BoG).

Another 13.5 per cent of their salary is deducted and paid to their respective corporate trustees to manage.

As a result, the contributions that were given to SSNIT prior to the coming into force of the law and the returns accrued thereof were to be transferred from the Trust to corporate trustees.