Today in History: SSNIT to spend extra GH¢243m on adjusted pensions

In 2020, the Social Security and National Insurance Trust announced that pensioners on its payroll as of December 31, 2019, will see a 6.6percent increment and an additional flat amount of GH¢37 on their monthly pensions.

With this redistribution, the lowest-earning pensioner will benefit from a total increase of 19percent which translates to GH¢357, an improvement from GH¢300 they previously earned.

Despite the announced increment, there were complaints about the insufficiency of the pension funds that is paid to pensioners which makes life difficult for them during retirement.

But SSNIT said the 6.6% increment will come at a huge cost of 243m to the Trust.

It however wants employers and workers to increase the amount they contribute to the Trust during active service.

SSNIT has yet again increased its payments by 10 percent in 2022.

With the upward adjustment of monthly pensions in 2020, the Social Security and National Insurance Trust (SSNIT) is expected to spend an additional GH¢243 million in paying pensioners on the scheme this year.

SSNIT, earlier this year at a press conference in Accra, explained that all pensioners on its payroll as of December 31, 2019 will see a 6.6percent increment and an additional flat amount of GH¢37 on their monthly pensions this year. With this redistribution, the lowest earning pensioner will benefit from a total increase of 19percent which translates to GH¢357, an improvement from GH¢300 they previously earned.

This adjustment also means 70percent of all pensioners will receive 11 percent increase on their pensions while 98percent of pensioners will receive an increase equal to or above the targeted inflation rate for 2020. What this essentially means is that, no pensioner on the scheme will see their income dwindle due to inflation.

Despite the upward adjustment, called indexation, which has given pensioners an increase in their benefits, there are still concerns that pensioners on the scheme earn too little which leaves many destitute in their retirement age.

This, Director General of SNNIT, Dr. John Ofori-Tenkorang maintains is outside the control of the Trust as benefits of pensioners are determined based on how much they contributed to the scheme during their active service.

Hence, his advocacy that contributions should be based on the full take home salary of workers (including allowances) rather than just the basic salary which, in most cases, has been structured to be very small so as to pay little to the scheme.

“That discussion has to be had by two key stakeholder groups—labour and employers. The 13.5 percent that comes to SSNIT is from the employer and the worker. So, if you have to change the amount, that conversation must come from those two stakeholder groups. It has been raised and I am sure this year, the interested parties will take it on and have that discussion.

As for SSNIT, our job is to lay out the roadmap and point put the landmines and the pitfalls along the journey from seeking employment to retirement. It is a conversation that will have to be had.

There are reports of employees who connive with their employers to pay very little SSNIT because they reason they are better-off taking it now and forget about what will happen in the future. Those are the kinds of advocacy we will put out there for the right stakeholders to pick it up,” he said during a media interaction in Accra.