The Chief Executive of the National Pensions Regulatory Authority (NPRA) Hayford Atta Krufi has welcomed proposals to increase contribution to the Social Security and National Insurance Trust (SSNIT) tier one scheme.

It follows proposals from SSNIT and some stakeholders in the pensions industry for the contributions to be increased to make the scheme sustainable.

A recent actuarial report showed that Ghana’s pension scheme could be under serious threat in the next 10 years if measures are not taken to review the rate of contributions. 

Speaking on PM Express Business Edition with host George Wiafe, Mr. Krufi stated that any decision taken will be dependent on recommendations from the various players in the industry.

“We should realize that government employers as well as the various union will be the ones making the payment and their view is very important”, he said.

He added that discussions are ongoing whether the SSNIT contributions should be increased or not.

He disclosed that the NPRA is also working on reviewing the investment guidelines for SSNIT as well as other measures to help reduce the cost of operations of SSNIT.

Ghana’s Pension Scheme

The new National Pension Scheme was instituted by the National Pensions Act, Act 766 which ensures that every Ghanaian worker receives retirement benefits as and when due.

The Act 766 which was passed on December 12th, 2008 mandated the establishment of a new contributory Three-Tier Pension Scheme with the National Pensions Regulatory Authority (NPRA) to oversee the efficient administration of the composite pension scheme

The New Pension Scheme was launched on 16th September, 2009 and its implementation started in January 2010.

The First Tier is the Basic National Social Security Scheme for all workers in Ghana.  It is a defined benefit scheme and mandatory for workers to have 13.5% contributions made on their behalf.  The contribution is managed by SSNIT.

The Second Tier is a defined contributory Occupational Pension Scheme mandatory for workers with 5% contribution made on behalf of members.  The contribution is managed privately by approved Trustees.

The Third Tier, which includes all Provident Funds and all other Pension Funds outside Tiers I and II is a voluntary scheme

Reviewing retirement age of 60 years

Responding to calls to review the current retirement age of 60 years, Mr. Krufi said the decision will depend on the constitution.

He explained that it will take government and parliament to amend the law on retirement age.

“This has to do more with the country’s constitution. Discussions may start now with Parliamentarians in terms of role they can play, when it comes to the review of the pension”, he said.

Reviewing investing laws covering Pensions in Ghana

Mr. Kruffi disagreed with proposals that the laws that guide where pensions funds should be investor should be reviewed.

It follows calls by some stakeholders that after the Domestic Debt Exchange Programme, which showed that Pension Funds were heavily impacted.

He emphasized that the pension’s law already stipulates areas that the funding could be invested.

He added that it is too early to make such changes due to the Domestic Debt Exchange Programme.

Mr. Krufi noted that for now, the percentage of investments can be reviewed and not necessarily the areas.

Pensions and the DDEP

On the DDEP, Mr. Krufi rejected arguments that his outfit did not do enough to protect contributors.

“It was government’s decision to restructure the Pension Funds. We should not forget that one of the reasons that forced government to undertake this exercise was the current economic situation”.

Mr. Krufi noted that the regulator indeed did intervene at all stages to ensure that the contributors are protected as well workers.