The contributions of private sector workers’ to the Social Security and National Insurance Trust (SSNIT) Pension Scheme, posted positive outturns during the third quarter of 2020, compared with what was observed in the same period of 2019, according to the Bank of Ghana’s recent quarterly bulletin.
With the mandate to cater for First Tier (Tier 1) of the Three Tier Pension scheme, the Bank of Ghana revealed that private sector workers’ contributions to the SSNIT Pension Scheme increased to GH¢560.67 million in the third quarter of 2020, from GH¢525.67 million collected during the corresponding quarter of 2019.
This represents a year-on-year upsurge of approximately 6.7 percent. Similarly, on a quarterly basis, total contribution in the review period also grew marginally by 1.6 percent when compared with GH¢551.59 million for the second quarter of 2020.
“The improvement in private workers’ contributions to the Tier-1 Pension scheme could be attributed to the registration of new employees as well as improved compliance by private sector employers”.Bank of Ghana
Additionally, as the statutory public Trust charged under the National Pensions Act, 2008 (Act 766), the Social Security and National Insurance Trust (SSNIT) in a statement revealed that it has adapted and implemented various cost saving techniques to help grow its funds including cleaning of the Pensioner’s payroll by deleting ‘ghost names’ on the payroll list every year.
Dr. John Ofori Tenkorang, the Director-General of SSNIT alluded that total cost savings his outfit made since 2017 has amounted to over GH¢512 million of which GH¢246 million savings were made on legacy investment transactions. Deactivation of over 11,000 Pensioners from the payroll generated savings of over GH¢144 million. Also, savings of about GH¢121 million have been made on ICT Support Fees over the period.
However, only a little over 1.6 Million people, representing approximately 11% of workers in the country remain active contributors to the Pensions Scheme and as such demands rigorous ways to encourage the larger populace to patronize such Schemes.
The National Pensions Regulatory Authority (NPRA) which is the overall body charged with regulating activities of the Pensions sector has over the years come up with ways of extending Pensions coverage in the informal sector.
For instance, the World Bank’s “First Initiative Project”, of which the first phase was completed in 2019 was targeted at extending the informal sector’s coverage. As such, the initiative focused on delivering an actionable Pensions coverage strategy to guide the authority and its stakeholders to encourage the informal sector to participate.
Also, the National Pensions Regulatory Authority enhanced the process for establishing specialised schemes for cocoa farmers, fishermen, and other informal sector groups.
The NPRA further believes that leveraging Pensions contribution collection this way would be critical to opening up the informal sector for participation in Ghana’s three-tier Pension scheme.
NPRA also holds that the Pensions system can accommodate innovation in developing private Pension products, including leveraging the mobile money platform to make Pensions accessible, relevant and rewarding for informal sector workers.
To boost Pensions coverage, the NPRA and other allied bodies like SSNIT have started exploring other strategies including collaboration with government and other financial sector regulators to aggressively promote informal sector coverage as part of the larger national policy on financial inclusion.