Social Security Trust reviews pension

The Social Security and National Insurance Trust (SSNIT) has reviewed pensions for 2002 financial year.

Under the current review, minimum pension has been raised from 15,000 cedis to 50,000 cedis a month. Additionally, under the new indexation formula being implemented for 2002, pensioners, other than those on minimum pension have been awarded a 35,000 cedis across the board increase plus an additional five per cent increase across the board.


A release issued in Accra by SSNIT on Friday said these increases take effect in January 2002 and they apply to persons currently on pension. With the 35,000 cedis across the board increases, persons on low pension will see a significant increase in their benefits.


It is worth noting that the Social Security Law PNDC Law 247 provides for a review of pensions annually. Accordingly, since 1992 the SSNIT has reviewed pensions and the reviews have been based on the average increase in salaries of contributors during the previous year.


It has however, been observed that the across board percentage increases have made reviews regressive as the gap between the top and bottom pensioners widens further and further apart in absolute terms.


As a result, a novel redistribution formula has been used in 2001 to put emphasis on the principle of solidarity in social security. This formula will, to some extent, improve the lot of the less fortunate pensioners.


Experience has shown that generally low salaries of the average worker notwithstanding, the key contributing factor to the low pension benefits, is the fact that some employers who are charged with effecting social security deductions knowingly under declare the earnings of their employees.

The seriousness of such action becomes clear, when one recognizes the fact that initial pension benefit computations are related to a contributors' best three years earnings during his or her working life.


This means that the higher a contributors' earnings, the higher the pension he or she would receive. The Trust currently has on record over 20,000 contributors who earn below 100,000 cedis a month and the lowest monthly earning recorded by the Trust is 11,000 cedis.


The statement said in order to help SSNIT solve the problem of low minimum pension, the Trust will like to entreat employers not to under declare the earnings of their employees since such practices impact negatively on the pension of such employees.


Employees should also be alert and should not collude with their employers to under declare as it has been in some cases. It is therefore, clear that in order for the Trust to sustain meaningful guaranteed pensions, employers, who pay contributions on behalf of members will be required to contribute on the basis of, a at least the approved national minimum wage at any particular point in time.


The self-employed contributors shall also be expected to contribute on, at least the minimum wage. "Accordingly, we believe that any proposals for review of the PNDC Law 247 should include an amendment that will make it mandatory for contributions to be made on a salary base no less than the approved national minimum wage," the statement added.


Once this is done, it should be possible for the Trust to sustain its programme of providing meaningful minimum guaranteed pension.