Research conducted by the Africa Centre for Retirement Research (ACRR), a non-profit policy research think tank, into the sustainability of the pension scheme, has urged parliament to as a matter of urgency, amend the laws on pensions to ensure that the Social Security and National Insurance Trust (SSNIT) is financially sound to contribute to the current and future generations.
Sharing the findings of the report at a media briefing in Accra, the Executive Director of ACRR, Mr Abdallah Mashud, called on the National Pensions Regulatory Authority (NPRA) and SSNIT to hasten the process of developing administrative and operational expense policy guidelines that would regulate the expenditure of the Trust in the ultimate interest of the Ghanaian worker.
The research was meant to contribute to shaping policy in the areas of social protection, retirement, and pensions. Key among the proposals are: the upward review of the current SSNIT contribution of 11 percent and a law to mandate the scheme to present its actuarial valuation reports to Parliament for scrutiny to save the scheme from becoming insolvent.
According to the research, it has also been proposed that people who have strong financial and investment backgrounds be appointed to the SSNIT Board, while the government also makes efforts to pay the debts it owes the Trust.
Legislative Reforms
Mr Abdallah Mashud noted that the changes in demographic and economic factors in recent decades are creating serious sustainability challenges for pension systems around the world, of which Ghana is not excluded.
To address the challenges and thereby prevent the collapse of public pension systems, he stated that, governments and policymakers in Ghana and other parts of the world have to embark on the necessary legislative reforms.
Making reference to Section 53 of the National Pensions Act, 2008 (Act 766), Mr Mashud suggested that an external actuarial valuation of the SSNIT scheme be carried out every three years.
He thus, referenced the last two actuarial valuation exercises carried out in 2014 and 2017 by the International Labour Organisation (ILO) and the Actuarial Department of SSNIT which indicated that the scheme is facing medium to long-term sustainability danger.
“The 2014 assessment did not only certify that the current assets of the SSNIT scheme, together with future contributions, will not be sufficient to pay all future benefits and administrative and operational expenses over the projection period, but it also projected that the fund reserves were set to deplete in 2042”.
Abdallah Mashud
Addressing the imbalance
Mr Mashud averred that it was based on the analysis of the two actuarial valuation reports that his outfit is making the proposals to Parliament, policymakers and all stakeholders of the scheme to take the necessary steps to address the imbalance in social security finances through parametric and legislative reforms to sustain the full payment of benefits on a timely basis to current and future beneficiaries.
Mr Mashud noted that the report also proposed an increase in the retirement age from 60 to 62 over a 12-year period, starting from 2025 to 2037, to have a positive impact on the financial sustainability of the scheme.
“The ACRR is, however, of the opinion that considering SSNIT pensioners’ post-retirement mortality pattern, increasing the retirement age by two years will result in more members dying in service.”
Abdallah Mashud
To address the solvency concerns of the SSNIT scheme, the report called on Parliament and other relevant stakeholders to examine the recommendations in the actuarial reports and commence discussions to address the financing gap of the scheme.
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