Pension payments must be sustained

The Social Security and National Insurance Trust (SSNIT) last Thursday increased monthly pension payments by 15 per cent, effective January this year.

Under the arrangement, all persons on the SSNIT pension payroll as of December 31, 2023, will have their monthly pension increased by a fixed rate of 10 per cent plus a redistributed flat rate of  five per cent which comes up to an amount of GH¢79.10.

The redistribution, which is to cushion persons with low pensions under the current economic situation, is also a mechanism applied to the rate (indexation rate) to cushion low-earning pensioners in conformity with the solidarity principle of social security. 

SSNIT, in consultation with the National Pensions Regulatory Authority (NPRA) and in line with Section 80 of the National Pensions Act, 2008, (Act 766), indexed the monthly pensions upwards by 15 per cent for the year 2024.

The effective increase in pensions would, therefore, range from 10.05 per cent for the highest-earning pensioner to 36.37 per cent for the lowest-earning pensioner.

Accordingly, the Daily Graphic is aware that the highest-earning pensioner as of December 31, 2023 will now receive GH¢186,777.58 per month in 2024.

The lowest-earning pensioner will now have the monthly pension increased from GH¢300 to GH¢409.10 in 2024.

Also, the average monthly pension will now increase from GH¢1,527.29 in 2023 to GH¢1,756.38 in 2024.

The 15 per cent indexation rate will result in an additional pension expenditure of GH¢697.64 million, bringing the total pension payroll expenditure in 2024 to GH¢5.38 billion. 

The total expenditure will exclude pension cost for new awards, that is, the benefits to be paid to retirees who will be due for pension in 2024.

The total benefit expenditure is projected to increase from GH¢5.44 billion in 2023 to GH¢7.02 billion in 2024.

We are happy that SSNIT, in spite of the economic challenges in the country which is mainly as a result of global crises, coupled with the impact of government’s Domestic Debt Exchange (DDEP) on pension funds, has been able to increase pensions by 15 per cent as a way of cushioning pensioners on its monthly payroll.

Much as we are aware of the fact that last year, the percentage increase reached 25 per cent, we still believe that the 15 per cent rate is fair. 

It must be acknowledged that pension funds must be protected at all cost into the future because the scheme is not only relevant today but for a long time to come.

The paper is aware that the state-run pension scheme might for now accommodate a higher rate but it is also crucially imperative to know that the sustenance of the scheme is most paramount under the circumstances and, therefore, the rate as announced is manageable as it is appropriate under the circumstances.

There is one other critical issue that workers of today must acknowledge regarding how pensions are calculated and why they need to ensure that they allow their employers to either remit or pay the right amounts to SSNIT.

The Daily Graphic would like to remind employees that per the calculations of pensions, it is purely based on what is contributed on their behalf and, therefore, it will be against their interest if they connive with their employers to remit smaller amounts to SSNIT on their behalf.

To us, higher pensions are based on what one contributes and the huge amounts received by some are ample evidence of that fact.

While we urge SSNIT to continuously ensure that its investments are protected to attract the right returns to sustain the scheme, we believe that both employers and employees have a role to play in that regard.

We are aware that SSNIT last year launched a major initiative dubbed “Self Employed Enrolment Drive (SEED),” which is aimed, among other reasons, at enlisting more self-employed persons in the country on the tier one pension scheme.

That, to us, is not only laudable but necessary to ensure that the number of contributors to the scheme is increased because that also helps to further improve the liquidity position of the scheme while prolonging its viability.

It is, therefore, necessary to encourage all to sign up and make a contribution because it will guarantee retirees some income until they pass away.

It will also help to reduce their dependence on relatives, children and friends when they can no longer work.