Business News of Tuesday, 8 January 2019
The Social Security and National Insurance Trust (SSNIT) has announced an increase in the monthly pensions for 2019 effective this month.
The increase represents an 11% upwards adjustment to the amount currently being enjoyed by pensioners on the payroll of the Trust.
Addressing selected media at the SSNIT head office in Accra after a presentation on the indexation (increase in monthly pension), Director-General of SNNIT Dr John Ofori-Tenkorang explained that the increment is a reflection of current economic conditions.
He detailed that the amount is arrived at after three key factors are considered. These are – average salary growth of active contributors, the annual average change in the Consumer Price Index (CPI) and the liquidity and financial status of the Fund.
To ensure equitable distribution of the Fund and to ensure that the increase affects the lower pensions, Dr Ofori-Tenkorang disclosed that of the 11% increment, 9% will be a fixed rate and the remaining 2% redistributed as a flat amount of GHC15.89 to all beneficiaries.
“Every pensioner is going to see their pensions increase by at least 9%. Then there is 2% of the total which is then going to be spread evenly in terms of the Cedi value to all pensioners and that amount is about GHC15.89. When you do it that way, the people who are low earners, the GHC15 is actually a higher percentage of their base and those who are high earners, that GHC15 is actually immaterial but it is effectively a form of redistribution. That we are doing. The aim of that redistribution is to ensure that the gap between the high and low earns is a bit compressed” Dr Ofori-Tenkorang noted.
The redistribution formula he added will benefit almost 80% of the pensioners on the SSNIT payroll.
This category of people, mostly lower earning people, he noted will earn about 15% more.
The SSNIT D-G announced that the new minimum pension of GHC300 after the 11% takes effect, will be slightly higher than the national daily minimum wage of GHC287.55.
He mentioned that “With this indexation, about 80% of the pensioners are going to see their pensions increase by more than the overall index rate of 11%. In fact, the low earners are going to see their pensions increase by 14.76% almost 15%.”
According to him, SSNIT is expected to expend GHC212.19 as its cost with the new indexation for existing pensioners in 2019.
The announced indexation by SSNIT is in fulfilment of the provisions in the National Pensions Act, 2008 (Act 766), Section 80.
Dr Ofori-Tenkorang assured pensioners of prudent use of their contributions and sustainable investments to ensure that the Fund is able to meet their obligations.
He thus assured pensioners of liquidity to meet the new increment monthly for 2019.
These details were made known during a press interaction at the SSNIT Headquarters in Accra where the media were taken through the new indexation by SSNIT.