Mr Abdallah Mashud, Executive Director of a Think-tank based in Ghana, Africa Centre for Retirement Research (ACCR), has called for a regular review of SSNIT Pension scheme to make it relevant in succeeding years.
Mr Mashud issued the statement on the back of Actuarial valuation reports which was carried out by his Think-tank – ACCR. The statement clarifies the ACCR report on whether the scheme is financially sustainable over a specified period into the future (projection period). He indicated that the review will make the scheme to stand the test of time.
The statement explained that, considering applicable financing rules and the future demographic and economic environment in which it will operate, 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 period covered by the projections in the report.
Mr Mashud stated that the examination of the SSNIT Scheme Fund ratios and cash flow measures, including income rates, cost rates and resulting annual balances proved that the Basic National Social Security Scheme is facing medium to long-term sustainability danger, and this was evidenced in the Scheme’s assessment reports.
The Reserve to Deplete in 2042
The statement said there was an indication that the Trust’s funds on which Social Security relied to pay benefits were running low, and was warning about what might happen (even in a good economy), if recommendations relating particularly to reviewing contribution rates and, benefits provisions and, risk reduction strategies were not considered and implemented. The statement continued that the 2014 assessment did not only certify that the current assets of the SSNIT scheme, together with future contributions, would not be sufficient to pay all future benefits and administrative and operational expenses over the projection period, it also projected the fund reserves were set to deplete in 2042.
The results of the report indicated that that “the SSNIT scheme is not financially sustainable over the period covered by the projections in this report.”
Regular Review is the way Forward
Mr Mashud reiterated in the statement that regular review of the pension scheme will sustain it for the foreseeable future. However, he cautioned that if policymakers and stakeholders do not undertake the necessary steps to address the imbalance in the social security finances through parametric and legislative reforms, the Trust funds will be unable to pay full scheduled benefits on timely basis in 2037.
The statement noted that whereas in 2014, the scheme had 28 years to figure out how to avoid reserve depletion and imminent collapse of the scheme, that number dropped to 19 years as at the end of 2017 (within 3 years).
The statement said number of workers contributing to support a pensioner (dependency ratio) dropped further from 9 contributors per pensioner in 2013 to 7 in 2020 and therefore, based on income-expenditures dynamics among other considerations for the period 2018 to 2020 and its expected impact on reserves, the depletion date for the next valuation may come earlier than 2037.
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