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.
Worker – 5.5% of workers’ basic salary
Employer – 13% workers’ basic salary
Total – 18.5% of workers’ basic salary
The 3 –Tier scheme covers all workers in both the private and public sector. It is optional for the self-employed.
There are four (4) types of benefit under the SSNIT scheme that members can enjoy depending on which contingency has occurred.
Under the Superannuation Pension we have Old Age Pension and Reduced Pension.
Old Age Pension
Basis for Calculation
Each year for the 1st 15 years of contribution is rated 2.5%. The subsequent years attract a yearly rate of 1.125%. The Pension right ranges from 37.5% – 60%.
Pension Right Table
|Years of Contribution||15||16||17||18||19||20||21||22||23||24||25|
|Pension Right (%)||37.50||38.63||39.75||40.88||42.00||43.13||44.25||45.38||46.50||47.63||48.75|
|Years of Contribution||26||27||28||29||30||31||32||33||>34||35||36 & above|
|Pension Right (%)||49.88||51.00||52.13||53.25||54.38||55.50||56.63||57.75||58.88||60.00||60.00|
Lump Sum Payment
The lump sum payment now falls under the Second Tier.
To qualify for invalidity pension, the member must have contributed for 12 months in aggregate within the last 36 months preceding the incidence of the invalidity. He/ She must have also been certified by a Medical Board as being incapable of any normal gainful employment due to a permanent physical or mental disability.
The invalidity pension is paid monthly to such a person who has been confirmed and certified incapable of earning an income.
To qualify for invalidity pension:
Survivor’s Lump Sum
This is paid to dependants of members under the following:
An employer is the owner of an establishment or the person who has the ultimate control over the affairs of an establishment and with whom the worker entered into a contract of service or apprenticeship and who is responsible for the payment of his salary.
No. The Act stipulates that minimum contributions must be made on the approved monthly minimum wage. The maximum contribution to the Trust shall not exceed 13.5% of a maximum amount to be determined by the Trust periodically in consultation with the NPRA.
Pension is a fixed sum paid regularly to a person, typically following retirement from service. It is a regular payment made during a person’s retirement from an investment fund to which that person or the employer has contributed.
Pension is a type of retirement plan, usually tax exempt, wherein an employer makes contributions toward a pool of funds set aside for employees’ future benefit. The pool of funds is then invested on the employees’ behalf, allowing an employee to receive benefits upon retirement or disability.
A trust, in its simplest form, is an arrangement under which assets are held and looked after on behalf of others called beneficiaries. In other words, it is a legal arrangement distinct from the plan sponsor where the contributions for the assets are deposited with the Trustee.
A trustee is a person who holds and looks after pension assets for the benefit of members and their dependants. Although assets are held in the name of the trustees, they do not belong to them.
Also referred to as Certificate of Life is a certificate produced by a trusted entity or pensioner to confirm that the pensioner is still alive.
At SSNIT, Life Certificates are completed by pensioners aged 75 years and above and renewed every three (3) years to confirm the pensioner is still alive.
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