The Africa Centre for Retirement Research (ACRR), a Think-tank based in Ghana has announced that SSNIT will release the new pension indexation rate for 2022 in January next year, in consultation with the National Pensions Regulatory Authority (NPRA).
According to the ACRR, starting in January 2022, monthly pension payments in Ghana will increase by at least a fixed rate of 9% per pensioner.
The expected increase in pension payment, according to the ACRR, is in accordance with the National Pension Act, 2008 (Act 766 as amended), which states that “the Trust shall annually review the pension payment, which shall be indexed to wage inflation rates of active members or another rate determined by the Trust in consultation with the Board of the Authority.”
This, it stated, would ensure that the rapid increments in the cost of goods and services will have no impact on the ability of retirees to purchase them.
“The objective is to keep retirees buying power constant by applying inflation-adjusted index to pensions in payment.”
“The Fixed Rate of increase for each pensioner is derived using Annual Average Price Inflation Rate as the primary reference variable, whilst the ‘Flat Amount’ is derived from the excess or difference between the awarded fixed rate and the agreed overall indexation rate for the year.”
ACRR
This move, per the center, will help bridge the rising income divide between new and old retirees.
“To practically sustain the economic welfare of pensioners, the minimum pension, which has stayed at GH¢ 300 since 2018 needs to be reviewed upward in 2022 to reflect the actual cost of living. That will also close the growing economic gap between new and old retirees.”
ACRR
Review Of the SSNIT Pension Scheme
Mr. Abdallah Mashud, Executive Director of ACRR, averred that the SSNIT Pension Scheme should be reviewed on a regular basis to ensure that it remains relevant in the coming years.
“Section 53 of the National Pensions Act, 2008 (Act 766) stipulates that an external actuarial valuation of the SSNIT Scheme is carried out every three (3) years.
“Accordingly, the last two actuarial valuation exercises were carried out for periods ending 31st December, 2014 and, 31st December, 2017 by the International Labor Organization (ILO) and the Actuarial Department of SSNIT.”
Mr. Abdallah Mashud
Mr. Mashud intimated that analysis of the SSNIT Scheme Fund ratios and cashflow measures, such as income rates, cost rates, and resulting annual balances, revealed that the Basic National Social Security Scheme was in danger of medium to long-term sustainability, as evidenced by the Scheme’s last two assessment reports. This, he believes, should be rectified in the shortest possible time to avert the looming danger.
“Based on the results of this valuation, we hereby certify that the SSNIT scheme is not financially sustainable over the period covered by the projections in this report. This means that in 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 this report”.
Mr. Abdallah Mashud
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