Director General of the Social Security and National Insurance Trust (SSNIT), Dr. John Ofori Tenkorang, says the benefits paid by the Trust to pensioners are directly based on their contributions when they were in active service.

Dr. Tenkorang said this in an explanation as to why some pensioners receive ‘peanuts’ from the Trust after long years of service.

According to him, the SSNIT is required by law to collect a premium of 13.5% from the basic monthly salaries of workers which is kept in trust till the contributor goes on pension.

However, the amount of income one makes ultimately determines the amount that forms the 13.5% premium the SSNIT is mandated to collect.

Thus, workers who receive low salaries are likely to receive low contributions from the SSNIT during their retirement, and the opposite applies to highly paid workers.

Speaking on PM Express Business Edition, he said “today is the third Thursday of the month, so we’re going to pay pensions. Today somebody is going to get 50,000 Ghana cedis in their account. How’s the person getting that? It’s based on your income. It is based on the income that you were earning on which you went to pay the requisite contributions.”

Breaking down how the system works, he said;

“So let’s look at something, right now as at April this year – I’m not talking ancient history, I’m talking now – when I looked at the people who had come to SSNIT to insure their incomes would you be surprised if I tell you that almost about a quarter of the people who came to insure their incomes at SSNIT, about 25% said their income were between minimum wage which is about 400 Ghana cedis a month and 500 Ghana cedis a month.

“And so they came to SSNIT and they said ‘this is the income that I’m earning, that I want you to protect for me.’ By the time you get to 800 cedis a month, you’re almost getting to maybe 45% of the people who come to seek some form of protection. This is the protection that they’re seeking. And so they come and they pay the 13.5% of that.

“Now let’s do some quick mathematics. If the SSNIT policy which is an Act of Parliament says that if you come and insure your incomes with us for a period of 35 years we will replace that income, the highest amount that you came to insure with us, we will replace 60% of that as your starting pension pay for life. So you gave us 13.5% for a period for a period of 35 years on increasing balances because when you start working you start with a small salary and it grows over time, so you pay 13.5% on that. Then we are committed to pay you 60% of that starting and increase it for life. So bring 13.5% and we’ll give you 60%.

“Now, if I’m telling you that somebody is bringing 500 cedis in April, and this person is close to retirement, maybe let’s say the person is retiring this year. And even if the person has been with us for 35 years, he’s entitled to 65%. So 60% of 500 is 300 cedis. So if the person gets 300 cedis would you say that SSNIT has cheated the person?”