This is coming after the Social Security and National Insurance Trust (SSNIT) announced an increase in pensions by at least 11% for the year.
The Director-General of SSNIT, Dr John Ofori-Tenkorang said this as part of the review in pension indexation.
According to SSNIT, “The approved overall indexation rate of 11% for 2020 is higher than the forecasted inflation rate of 8.0% for 2020. The overall indexation amount was redistributed at a Fixed Rate of 6.6% and a Flat Amount of GH¢ 37.38 for all Pensioners on the SSNIT Pension Payroll as of 31st December 2019.”
SSNIT added that 70% of pensioners will receive 11% or more as an increase in their pensions. Meanwhile, 98% of the pensioners will see an increase that will be equal to or above the targeted inflation rate for 2020.
This implies that the lowest-earning pensioners will get an effective increase of 19.06%. This is referred to as redistribution.
Redistribution is a mechanism used to cushion members on low pensions in line with the solidarity principle of social security. Pensioners who receive low pensions is because they got low basic salaries on which contributions were paid.
This means that pensioners on the SSNIT Pension Payroll as of December 31, 2019, receiving the minimum pension of GHC300 ($52) will have their pensions increased to GH¢357.18 ($62).
The minimum pension for all new Pensioners for 2020 will be GH¢300.00.
By this new indexation rate, the current pensions paid will be increased by GH¢ 243 million for the year 2020.
According to SSNIT, there were about 216,000 pensioners on the payroll in 2019 but this is expected to increase to 240, 000 in 2020.
SSNIT used the percentage change in the annual average Consumer Price Index (CPI) for 2019, forecast of the 2020 National Annual Price Inflation, ability of the Fund to pay and the long term sustainability of the Scheme to determine the 2020 indexation rate.