The pension benefits of millions of retirees will increase by 10 percent in the year 2021 with immediate effect due to the revision of the monthly pension scheme by the Social Security and National Insurance Trust (SSNIT) in consultation with the National Pensions Regulatory Authority (NPRA).
The increment is in accordance with Section 80 of the National Pensions Act 2008 (Act 766) as indicated in a recent statement issued by the Social Security and National Insurance Trust and is applicable to “all Pensioners on the SSNIT Pension Payroll as at 31st December, 2020”.
Detailing how this increment shall be implemented, pensioners on the Social Security and National Insurance Trust payroll will have their monthly pension increased by a Fixed Rate of 9.34% representing the annual average price inflation. More so, such pensioners are entitled to receive an additional redistributed flat amount of GH¢6.47.
Accordingly, for an average retiree who gets a monthly minimum amount of GHS300.00 as at the end of 31st December 2020 will have their monthly pensions increased to GH¢334.49.
The Social Security and National Insurance Trust further asserted that consequently, the minimum benefit for all new Pensioners currently enrolled on the pension scheme this year will be GH¢300.00, effective January 2021.
“This means, pensioners whose computed monthly pensions fall below GH¢300.00 will be placed on this minimum”.
Giving further insight into the method used in the computation, SSNIT opined that redistribution is a mechanism applied to the indexation rate to cushion members on low pensions in line with the solidarity principle of social security. Low pensions arise as a result of low basic salaries on which contributions were paid.
Indexation in simple terms means adjusting the pension wages by regulating the effects of inflation, cost of living, input prices among other factors over time, and it is usually used in inflationary environments like Ghana.
The Management of Social Security and National Insurance Trust further alerted the general public that Pensioners will be paid on the third Thursday of each month
“The pension a member enjoys under the First Tier Scheme is dependent on the Basic Salary (on which contributions were made) and the number of months one has contributed to the Scheme”.
The Social Security and National Insurance Trust is a Statutory Public Trust with the mandate of administering the First Tier Basic National Social Security Pension Scheme under the National Pensions Act 2008 (Act 766).
The First Tier features a contribution of 13.5% with the employer contributing 13% and the remaining 0.5% is borne by the employee.
SSNIT is charged with the responsibility of replacing part of lost income to its contributors and their dependents due to old age, invalidity, emigration or death.
The pension scheme as administered by SSNIT has an active membership of over 1.6 million as at July 2020.
The National Pensions Regulatory Authority (NPRA) is required to regulate and monitor the operation of the three-tier pension scheme and ensure effective administration of all pensions in the country.
