Pension Schemes to be unified by 2021

The Deputy Minister for Employment and Labour Relations, Bright Wireko Brobbey, has revealed that the government has initiated a roadmap aimed at unifying all pension schemes in the country.

The roadmap, according to Mr. Brobbey, has received Cabinet’s approval with the unification of the pension schemes expected to be completed by 2021.

The National Pensions Act (766), passed in 2008, stipulates that all parallel pension schemes be unified and brought under the three-tier system.

Despite the law’s existence since 2008, its provisions have not been implemented.

The process of unification is one of the mandates of the National Pensions Regulatory Authority (NPRA) to ensure that the fragmented pension regimes, are harmonized.

“We ought to take our time and look at the institutions involved, once Cabinet has given the approval, it is now left with NPRA and the committee working on it, to really put in place measures, and it involves meeting stakeholders. It is not something that can be done overnight and so month by month some kind of engagements are going on- for example Parliament, have some form of pension regime and we have to engage Parliament and others like the Audit Service, so all these institutions must be engaged. So, hopefully we should look at between now and 2021 where we should have a solid kind of unification.” he told journalists in an interview prior to joining some officials of the NPRA to appear before the Public Accounts Committee hearings on Monday.

Mr. Brobbey further explained that the benefits of the unification is to ensure sustainability of the pension regimes.

“At the moment there are some categories of staff who do not contribute to their pensions but are being paid – these are problematic, if you go on doing that; actuarial studies from SSNIT and NPRA themselves have shown that, pension regime cannot be sustained as a country. It is also to ensure equity and fairness. We are workers who work for pay. We must have standards in contributing to our own pensions, so if we unify, it will inure to the benefit of everyone and the nation at large”, he noted.

CEO of NPRA, Hayford Attah Krufi, also indicated that the law mandates NPRA to ensure that everyone under the formal sector comes under the three Tier, which is what the unification process is about.

He added that within the roadmap, NPRA has to engage institutions that fall under the non-contributory system.

Under the CAP30 which was set up in 1952, civil servants were not supposed to contribute, as well as Armed Forces but Prisons and other security agencies do not make contribution, “but to migrate them, you need to engage them to get their understanding and buy in before the process can be complete”.

He also disclosed that the NPRA has been given the mandate to prosecute institutions who do not pay its pensions but are yet to begin prosecution since they are in the preparation stage.

Section 213 of the National Pensions Act as amended also states that upon the Act coming into force, all existing parallel pension schemes – such as the colonial CAP30 and University superannuation schemes among others – should be unified under the three-tier scheme within a four-year period, except that of the Armed Forces.

The CAP30 pension scheme, which many agree has outlived its usefulness, is a non-contributory pension scheme instituted in 1952 under the Pensions Ordinance, No 42 of Chapter 30, for civil servants in the service before 1972.