Abdallah Mashud, the Executive Director, Africa Center for Retirement Research (ACRR), has projected in a statement that pensions in payment are to go up by at least a fixed rate of 25% in 2024.
According to the ACRR Director, January is the most important time of the year for pensioners and their dependents, primarily because it is the time when the Social Security Administration announces the new rate by which pensions in payment would be increased for the current year.
“It is therefore expected that in January next year, SSNIT, in consultation with the National Pensions Regulatory Authority (NPRA) will announce the new pension indexation rate for 2024, as required by Section 80 of the National Pension Act, 2008, (Act 766).”
Abdallah Mashud
Pension indexation is a policy for the upward review of pensions in payment as a means of preserving the purchasing power of pensioners or restoring the purchasing power lost by pensioners in the previous year.
Pension indexation also presents the opportunity for the Social Security Administration to redistribute pension wealth from the rich to the poor, as required by the Social Security principle of solidarity.
Indexation policies, in recent times, have, therefore, been used by most countries to improve the redistribution of pension wealth to provide more financial protection for the poor.
Mr Abdallah Mashud noted that Section 80 of the National Pension Act, 2008 (Act 766) provides 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”.
In practice, SSNIT and the National Pensions Regulatory Authority (NPRA), based on analysis of several variables agree on what is termed as the ‘Overall Rate’ by which pensions will increase for the coming year.
Given the overall indexation rate, a ‘Fixed Rate’ of increase for each pensioner and an equally distributed ‘Flat Amount’ are determined. The Fixed Rate is equivalent to the Annual Average Price Inflation Rate of the previous year.
“As you may recall, price inflation averaged 31.47% in 2022 and each pensioner was awarded a fixed rate 19% in 2023. Price Inflation averages 42% as at November 2023. “
Mr Abdallah Mashud
Provisions of Act 766
Mr Abdallah Mashud stated that based on the provisions of Act 766, and the practice of SSNIT over the years, coupled with the economic and demographic trends in 2023, ACRR is projecting that pensions in payment could increase by at least a Fixed Rate of 25% for each Pensioner in January 2024.
The minimum pension amount currently stands at GHS430.58. This represents 60% of the value of the national poverty threshold. In line with global trends and best social security administration practices, it is expected that the Government, in its effort to practically sustain the economic well-being of the poor pensioners in 2024 will ensure that SSNIT increases the minimum pension.
A trend analysis of the Minimum Pension shows that the Minimum Pension has consistently increased each year since 2000 until 2017, and in some cases doubled (2013 and 2014).
The minimum pension amount, however, remained at GH¢300.00 for four successive years (2019, 2020, 2021, and 2022) and was only increased in 2023 to GHS430.58.
The current minimum pension amount represents 60% of the value of the national poverty threshold – a case that poor pensioners are still worse off.
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