The Social Security and National Insurance Trust (SSNIT) has announced an increase in pensions by at least 11% for 2020.
Director-General of SSNIT, Dr John Ofori-Tenkorang announced Thursday in Accra as part of the review in pension indexation.
The 2020 indexation rate was determined using the percentage change in the annual average Consumer Price Index (CPI) for 2019, forecast of the 2020 National Annual Price Inflation, ability of the Fund to pay and the long term sustainability of the Scheme among others.
According to SSNIT, “The approved overall indexation rate of 11% for 2020 is higher than the forecasted inflation rate of 8.0% for 2020. The overall indexation amount was redistributed at a Fixed Rate of 6.6% and a Flat Amount of GH¢ 37.38 for all Pensioners on the SSNIT Pension Payroll as at 31st December 2019.”
With this redistribution, the lowest-earning pensioners will get an effective increase of 19.06%.
According to SSNIT, 70% of pensioners will receive 11% or more as an effective increase in their pensions. 98% of pensioners will receive an effective increase equal to or above the targeted inflation rate for 2020.
Redistribution is a mechanism applied to the indexation rate to cushion Members on low pensions in line with the solidarity principle of social security. Low pensions arise as a result of low basic salaries on which contributions were paid.
Accordingly, Pensioners on the SSNIT Pension Payroll as at 31st December 2019 receiving the minimum pension of GHS300.00 will have their pensions increased to GH¢357.18 (an increase of 19.06%).
The minimum pension for all new Pensioners for 2020 will be GH¢300.00.
The new indexation rate will increase the current pensions paid by GH¢ 243 million for the year 2020.
According to SSNIT, there were about 216,000 pensioners on the payroll in 2019 but this is expected hit 240, 000 in 2020.