Low pension payment: Panellists call for change in workers contribution

Panellists at a forum on pension schemes have advocated a change in pension contributions to cover the total emoluments of workers to address low pension payments to retirees.

Currently, pension contributions are paid on the basic salary, mostly referred to as penshionable salary of a worker, which according to them, was often too low resulting in low pensions.

They further called for a review of the pension laws and policies to expand coverage of pensions to rope in the informal sector which is mostly non-compliant of the pension laws.

Organised by the Institute of Fiscal Studies (IFS) in Accra yesterday, the forum was on the theme “Ghana’s Pension System: Is It Working?”

Mr. John Ofori-Tenkorang, Director-General of the Social Security and National Insurance Trust (SSNIT), said, that 25 per cent of SSNIT pensioners earn a monthly pension of GH ¢400 or less, while 50 per cent were paid GH¢600 or less monthly.

Approximately, 78 per cent of pensioners earn a monthly pension of GH ¢1,000 or less with only one per cent of pensioners receiving a monthly pension of GH¢5,000 or more, he stated.

The disparities in pensions, he explained, was due to corresponding low penshionable salaries which included GH¢400 or less, GH¢1,000 or less, GH¢1,800 or less and GH¢5,000 or more respectively.

He said the inclusion of the total emoluments in pension contributions would ensure an increase in amount of contributions which would in turn result in high pensions for retirees.

Mr. Ofori-Tenkorang urged workers’ unions and employers association to commence deliberations on how to increase pension contributions.

The SSNIT, he stated, has instituted measures in line with its investment framework to reduce the rate of non-performing investment to ensure maximum returns on the funds of contributors, adding that preventive measures including periodic audits to ensure funds were used as prescribed in the framework.

Director of Research and Planning, National Pensions Regulatory Authority (NPRA), Ernest Amartey-Vondee, noted that although a change in the penshionable salary would ensure that pensioners receive high monthly earnings, it could also become a hindrance to employers because it would add up to operational cost.

Dr.  Anthony Yaw Baah, Secretary General of the Ghana Trades Union Congress (TUC), called for a review of the country’s wage and social policies to address poor salaries of Ghanaian workers.

“Pensioners in the country will continue to live in poverty if we do not review the wage policy to pay workers well. That is the main reason for low pension contributions too,” he added.

Research Fellow of IFS, Daniel Aidoo Mensah, recommended a phasing out of the Cap 30 Scheme to eliminate inequities that existed, as stipulated in the new pension law, Act 766.

In doing so, he said there was the need to assure and allay the fears of those currently on the scheme about the safety and benefits of the new 3-Tier scheme and protection of their rights.


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