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Wednesday, December 8, 2021

Review contribution rate to prevent depletion

Social Security and National Insurance Trust (SSNIT) play videoSocial Security and National Insurance Trust (SSNIT)

Contribution of income to SSNIT has reduced by 26.7% on each contributing member

The government owes the Trust about 75% of its total debt

There is also an issue to do with the registration process for persons with disabilities

The Social Security and National Insurance Trust, SSNIT, wants the contribution rate to be revised instead of increasing the retirement age.

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According to a report by the Africa Centre for Retirement Research (ACRR), low contribution is likely to deplete the Trust’s fund reserves by 2037.

The government’s indebtedness to the Trust was also cited as a major factor resulting in the low contribution rate to the pension scheme.

Speaking at an event dubbed ‘Sustainability of the SSNIT Pension Scheme: Current Actuarial Status, Implications and Proposed Policy Responses,’ the Executive Director of ACRR, Abdallah Mashud, outlined the review process of the trust since 2008 till date as follows:

“The 2008 pension reforms gave rise to Act 766, which established a 3-tier contributory pension scheme. The reforms made specific changes to the old Social Security Law (PNDC 247).

“Notably, the reduction in the qualifying period from 240 to 180 months means members who would otherwise have qualified for Lump Sum (return of contributions plus interest) will qualify for pension, thus leading to bulging pensioner population, lower ratio of workers to beneficiaries and, declining funding ratios.”

According to him, increase in pension guaranteed period from 12 to 15 years means dependents of deceased pensioners aged, between 72 and 75 are eligible for death benefit under the current Law.

Similarly, the extension of the pension guaranteed period by 3 years has increased each survivors’ grant by 11% for members who die whilst still in service. Also, the amendment to the Act766 (Act 883) in 2014 introduced a new benefit type (Emigration Benefit).

However, on the other side of the scale, contribution income to SSNIT has reduced 26.7% on each contributing member.

He wants an adjustment to this rate to increase revenue generated by the pension scheme by the government.

President of the Ghana Federation of Disability Organization, Mawunyo Yakor-Dagbah who doubles as an advisory board member for ACRR, wants SSNIT to include the disability status and type of disability in their member registration process.

According to him, this will “facilitate the Federation’s drive to build disaggregated data on persons with disabilities.”

He emphasized that it “is worthy to note that Social Security could be a reliable source of data for effective policy formulation and programs for people with disabilities, as the nation strives to attain social and economic inclusion in all facets of human existence.”

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