From 2020 pensions will be calculated using the annuity factor.
The annuity factor is a method used to determine how much money can be withdrawn early from retirement accounts before incurring penalties. The calculation primarily uses life-expectancy data and is applied to annuities and individual retirement accounts.
Upper East Regional Minister, Mrs. Paulina Patience Abayage, announced this at the regional celebration of the 2019 Workers Day held in Bolgatanga under the theme, "Sustainable Pensions for all: The Role of Social Partners".
The Regional Minister added that, under the new method, a pensioner would receive the lump sum from his or her fund managers while the Social Security and National Insurance Trust (SSNIT), pays the monthly pension benefit.
She advised workers to use other investments schemes apart from SSNIT to help cushion them during their retirement.
Madam Abayage, a former labour union leader, said pension schemes in Ghana had evolved over the years since the colonial era and stressed that there would be the need to continue revising the notes on pensions in as far as times and events keep changing.
She recalled that the first pension scheme was introduced in Ghana in 1946, then came the CAP 30 scheme in the 1950s and 1960s and this was followed by the Social Security Act of 1965 leading to the establishment of SSNIT in 1972. She noted that all these changes were premised on the fact that, governments over the years, wanted to expand the coverage of the schemes and also, improve the entitlements of retirees.
Subsequently, in 2007, government through engagements with critical stakeholders came up with yet another revised scheme with an all-encompassing objective that was to among other things, provide better coverage in retirement while taking on board, informal sector workers. As a result, the National Pension Act 2008 came into being. It is otherwise referred to as the Three-Tier Pension and regulated by the National Pensions Regulatory Authority (NPRA).
Mrs. Abayage explained that Tier Two, for instance, is a work-based pension scheme, mandatory for all employees but is privately managed to provide a lump sum to contributions upon retirement.
The third-tier is the newest addition and provides for a voluntary provident fund and personal pension scheme with tax benefits for employees who decide to contribute for their pension beyond what the law mandates.
She said the government was aware that organised labour had raised issues about the schemes, especially its sustainability and the method used by SSNIT for the computation, but pledged that appropriate remedies were being sought by the stakeholders. "I know the government is working with SSNIT and the NPRA to resolve all issues concerning pensions including the unification of all schemes in Ghana", the Minister stated.
Upper East Regional Secretary of the Trades Union Congress (TUC), Mr. Augustine Apambila noted that many workers were paid salaries below the national minimum wage which is pegged at GHC270.00 per month. He added that many workers had been working as casual employees without employment contracts among other labour infractions.
He called on the government to resources the Labour Department to effectively carry out its mandate.
Source: ISD (Peter Atogewe Wedam)