Four years ago, after decades of pain with the way workers pensions were handled by the Social Security and National Insurance Trust, the country through the then government decided reforms were needed.  Corporate, public and self-employed persons were happy as at least the three tiered pensions structure meant they would have a level of control over their pension contributions, at least on the side of transparency in computing their rewards after long years of active service to the state.

Sadly, three years on, the hope has been dashed with potentially disastrous consequences for workers who are not aware of the imminent danger to their livelihood. Second tier contributions by Ghanaian workers, which is 5% of their monthly salaries are being managed on their behalf by the National Pensions Authority in total disregard to the National Pensions Act, 2008 (Act 766). Section 3(7) and 96(4) which states “Where an employer deducts a contribution from the salary of a worker, the contribution shall be held by the employer in trust for the purpose of this Act until it is remitted to the relevant schemes” (4) Where an employer deducts contributions from the salary of a worker, the contributions shall be held by the employer in trust until remitted to the trustees of the occupational pension scheme.

1. Did you know that the NPRA may have violated the directive that employers lodge employee contributions at the |Bank of Ghana until the occupational schemes were licensed by the NPRA?

2. Did you know Due to the configuration of SSNIT’s internal system as managers of Defined Benefits, SSNIT is having challenges in collecting and remitting contributions timeously? And that it is becoming onerous to keep accurate record on contributors’ principal and returns on investment and ultimately produce statements that would reflect the time value for money.
3. Did you know that if you retired today, the formula for calculating your lump sum based on past contributions is still under discussion three years after the pension reforms?
4. Did you know that as a worker, if you’re retired today, you may actually get your 25% lump sum benefit calculated based on all your long service to the state, but will terminate at 2009 and potentially lose your second tier contributions from 2010 to 2012?
5. Did you know that the estimated total amount of Tier 2 contributions collected from workers by the NPRA since January 2010 to date is GHȻ 587,513 million? Nothing has been mentioned about the Return on Investment at all. Important to remember that the NPRA promised a 91-Day Treasury bill rate as the returns they will give to contributors. Assuming an average Treasury -Bill rate of 15% (average over the last 3 years), compounded over the past 3 years, the GHȻ 587,513 million should be far more. The question is where is the money?
6. Why is the NPRA FEET DRAGGING ON licensing occupational pensions schemes that have been approved and have the capacity and skill to handle the 5% second tier contributions?

It is clear that if there is no action on the second tier, and no effort made to address the issue of calculating past contributions by workers under the older SSNIT regime, we cannot reach the goal of helping the informal sector under tier 3 achieve its aim of benefiting from a provident fund and subsequently as a tool for generating tax income for the state.

If you are a worker and care about your pensions, please make it a point to be present at the encounter with the media to be held on Thursday, OCTOBER, 11 2012 at 11:00 AM at the World Bank Knowledge Space Conference Room.

                                                            Topic and Speakers:    

Why Pensions are good and the Various Schemes in Ghana– Dr. Dan Seddoh

The Status Quo: Why Your Pensions are Meagre and what you can do to Maximise Benefits- Kofi Bentil

The Plight of the Ghanaian Pensioner Today- Mr. Ralph Fiawornu, Pensioner

Response from the NPRA  and the The way forward-  Mr. Sam Pee Yalley, Acting CEO, the NPRA.

Questions and Answers:   

For these and any other questions you may have, please join the IMANI and  he Institute of Financial and Economic Journalists (IFEJ) in a half day development dialogue.