Ghana’s social security will stop paying lump sum to pensioners; here’s the new scheme

The pensioners will now access their lump sum payments from the managers of pension schemes other than the SSNIT.

This means that SSNIT will only be mandated to pay monthly benefits to pensioners.

The Employment and Labour Relations Minister, Ignatius Baffour Awuah made this revelation explained that the move is in fulfillment of the ten-year payment date spelt out in the laws establishing the three-tier pension scheme.

He said that this development is expected to improve access to funds for better welfare of pensioners who have mostly complained of the meager claims received from the state pensions manager.

Speaking to Accra-based Citi FM he said “Upon the retirement of any individual, the scheme that person belongs to will pay the entitlement due the person. There are going to be two payments; SSNIT will continue to do the monthly payments but then the bulk payments will come from the defined scheme the person belongs to. So assuming I belong to hedge pension, it is the trustees of hedge pension that will ensure I get my defined pension because by that time I will even have foreknowledge of what I have contributed so far and the interest it has accrued.”

The Ghanaian pension law currently establishes a three-tier pension scheme.

The first tier is a mandatory contribution paid to the state pension funds manager, the Social Security and National Insurance Trust.

The second tier is also a mandatory contribution which is paid to a private fund manager.

While the third is a voluntary contribution paid and managed by private managers.

Due to the voluntary nature of the third tier, it has made it difficult to attract the majority of workers in the informal sector.

Meanwhile, a former CEO of the National Pensions Regulatory Authority, Daniel Aidoo Mensah said the situation could be better if some allowances are included in the pensionable salaries.

But in response, the Director General of SSNIT, Dr. John Ofori Tenkorang said that the decision will have to be agreed on by both employers and employees so interested.

“These conversations have to be had and the engagement has to be done, because ironically employees because they have to pay 5.5%, they will connive with their employers because they don’t want to pay; they want it now,” he remarked.

“If you tell them they have to pay on their allowances they may hesitate to pay on that. Then you go to the employer who has to match 13% and they try and get away by paying over the table,” the SSNIT boss added.