Veep tasks Labour Ministry to unify pensions to address disparities, inequities

Vice President Dr Bawumia

Vice President Dr Bawumia

The Vice President, Dr Mahamudu Bawumia has urged the Ministry of Employment and Labour Relations to expedite action on the unification of pensions to address the current disparity and inequity in the scheme.

According to the Vice President, the current pension scheme, which some category of people especially CAP 30 Pensioners enjoy – without contributing to the scheme, was “discriminatory, inequitable, fragmented and unsustainable.”

The Cap 30 is a class of people exempted by the colonial government from contributing to pension but was paid pension on retirement.

Dr Bawumia made the call in Accra yesterday when he opened the High-Level Stakeholder meeting on Unification of Pension Schemes in the Public Sector.

The programme organised by the Ministry of Employment and Labour Relations formed part of measures to implement the National Pensions Act 883, 2014, which stipulates that all institutions operating parallel pension schemes in the public sector are unified under the three-tier pension scheme, was attended by senior government officials and decision makers from the Ministries, Department and Agencies as well as public institutions in the country.

Following the passage of the National Pensions Act, 2008 (Act 766) as amended by Act 883 2014, all parallel pensions should have ceased but that was not the case presently and the Ministry of Employment and Labour Relations has initiated steps to implement the Act.

Dr Bawumia said for instance in 2016, a total of GH¢1.7 billion were paid to pensioners who had contributed to the scheme with each pensioner taking an annual average lump sum pension benefit of GH¢10, 041 and a monthly payment of GH¢837.00, while the over 77,877 pensioners under Cap 30, who did not contribute to the scheme, were paid a total of GH¢900 million with each individual taking an annual average lump sum of GH¢11, 560.00 and a monthly pension benefit of GH¢963.00.

“How can those who do not make direct contribution to their retirement earn more on retirement pension benefit  than those who contributed to the pension scheme through their monthly payroll deductions,” the Vice President queried.

He said the pension benefit gap between the CAP 30 holders and those contributing to the pension scheme would widen in the coming years and there was the need to address that.

Dr Bawumia said the objective of the pension reform in 2006 was to bring equity in the pension scheme, saying the current institutional discrimination in the pension scheme was not sustainable and must be carefully examined.

Dr Bawumia commended the Ministry of Employment and Labour Relations for its efforts to bring to finality the issue of pension unification in the country.

The Minister of Employment and Labour Relations, Ignatius Baffour Awuah in his welcome address said some new employees into the public sector continued to be enrolled under CAP 30 in contravention of Act 883.

He said the objective of the CAP 30 in the pre-colonial era could not be replicated in the 4th Republic, adding that the CAP 30 was “non-sustainable and does to conform to best practices.”

The Minister urged the SSNIT and the other Private Pension operators to initiate measures to enroll more people in the informal sector – cocoa farmers, dress makers, tailors, and carpenters – on to the pension scheme.

Mr Daniel Aidoo Mensah, the Executive Chairman of Aidoo Mensah and Associates, who chaired the programme, said pension unification would bring about viability, fairness and viability to the pension scheme, saying pension benefits should be affordable to the tax payer and subject to the ability of the State to pay.

By Kingsley Asare

 

 

 

 

 

 

 

 

 

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