A think-tank, Africa Center for Retirement Research (ACRR), has outrightly called for the immediate reversal of a policy by the Social Security and National Insurance Trust (SSNIT), intended to disallow 60-year-olds and above from contributing to the scheme.
According to the Center, the Trust’s policy to reject contributions from employers on behalf of workers who, according to their database, are 60 years and above, is assessed to be a social security policy disaster. It revealed that the policy has no “actuarial linkage”, is not in line with best practices and represents a gross violation of the rights of workers.
Additionally, ACRR stated that the policy could have resulted from a lack of thorough analysis of the data and wrongful interpretation of section 70 (1) of Act 766. In light of this, it noted that if the Trust did any actuarial assessment of the effect of their action, stakeholders and the public deserve to know what the data says about the financial impact if all the over 11,000 affected workers were to apply for their benefits at a time and immediately.
“The ACRR is strongly advocating that the policy must be reversed immediately. The policy will prevent many workers from qualifying for pension, hence deepening old-age poverty and economic inequalities. Recall that bridging economic inequalities is top on the agenda of the United Nations Sustainable Development Goals (SDGs). The policy if not reversed will adversely affect the success of the Trust’s effort to extend pension coverage to self-employed workers.”
Africa Center for Retirement Research
The policy, ACRR explained, has a significant adverse effect on both the affected workers and the scheme. It indicated that the scheme is currently facing sustainability issues per valuation reports and SSNIT has already rejected substantial contribution income from employers and voluntary contributors. It highlighted that this action by the Trust could be interpreted as a financial loss to the Trust.
“It is not enough for the Director-General of the Trust to verbally inform stakeholders about the financial health of the scheme and its ability to pay benefits into the future – assurance must be based on the actuarial valuation reports. As it stands, the Scheme’s assessment report for the period 2018 to 2020 is not ready – stakeholders are 6 years in the dark.”
Africa Center for Retirement Research
To minimize the political risk facing the scheme, the Center emphasized that Director-Generals of the Scheme must be made to present to Parliament and disclose the actuarial status of the scheme once every two years, as best practices require. It revealed that SSNIT as a purely Social Insurance Scheme must consider the policy as one that will considerably affect the retirement wellbeing of thousands of workers, and therefore will require thorough examination and even an amendment to Act 766 for implementation.
“This development has also lent credence to the proposal that SSNIT must enhance stakeholder consultations on the administration of the scheme.”
Africa Center for Retirement Research
Justification for reversal of Policy
Elaborating on its reasons for demanding the reversal of the policy, ACRR revealed that the directive by SSNIT did not detail the actuarial basis of the policy nor its social and financial impact on the affected workers or the scheme but simply referenced Section 70(1) of the National Pension Act, 2008, (Act 766). It underscored that by the statement of Section 70 of Act 766, the employee retires upon attaining a compulsory retirement age of 60 years and benefits are due on application by the member.
Furthermore, it explained that the employer issues a retirement notification letter to the employee after certifying that he/she has reached the compulsory retirement age or has opted to go on voluntary.
In effect, the Center noted that this provision does not “give restrictions on the maximum age at which a member could contribute to the scheme and does not mandate SSNIT to reject the contributions of workers based on the date of birth they have in their system. ACT 766 does not allow SSNIT to implement such a major policy by administrative means without resorting to an amendment”.
Also, ACRR indicated that an estimated 25% of the SSNIT contributors have differences in date of birth between employers and SSNIT. The Trust, it stated, has in place an Age Assessment Committee which is backed by regulation 27 of the Basic National Social Security Scheme Regulation, 2011 (L.I. 1989) to help establish the actual date of birth of the member in case of discrepancy.
ACRR however noted that the Age Assessment Committee upon examination of evidence submitted by a member could change the Date of Birth or decline the member’s request but does not have the right to reject contributions on behalf of such a member.
“A Trust policy that rejects contributions of workers based on the date of birth they have in their system represents a violation of the workers’ right to pension and right to choose when to apply for benefits (forcing such persons into unplanned retirement).”
Africa Center for Retirement Research
Moreover, the policy according to the Center, has left many experts questioning the technical capacity of the advisory unit of the Trust. It asserted that it has heard the Director-General on several platforms suggesting the need to delay retirement by increasing the normal retirement age from 60 to 65 years.
Subsequently, ACRR emphasized that the policy not to accept contributions from members aged 60 and above, will represent a major disincentive to register as a voluntary contributor and will naturally set up a huge campaign against the success of the informal sector program, which is due to be launched in March 2023.
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