Data from the Social Security and National Insurance Trust (SSNIT) has shown that a quarter of its contributors are on a basic salary of GH¢500 or less – a situation that will negatively impact how much they earn as pensioners upon their retirement.
According to SSNIT, about 434,655 workers who form a cumulative 25.35% of its contributors are paid a basic monthly salary of GH¢500 or less.
This implies that such contributors, with their highest contributions being GH¢55 monthly, are in line to likely earn a minimum pension on retirement. Currently, the minimum pension is GH¢300; and even with that, SSNIT said, some would have received less if they were to be compensated based on their contributions.
It is against this background that economist and professor of finance at the University of Ghana Business School, Prof. Godfred A. Bokpin, said workers owe it to themselves to ‘insure’ against their retirement.
“Regardless of how much you are earning, you must set aside a portion to maintain the lifestyle you want to have,” he stated.
While he recognized that the salary of average public sector workers is not encouraging, he maintained it is important that an effort be made to save portions of it. To this end, he cautioned workers to develop lifestyles that can be sustained in retirement.
However, Prof. Bokpin – who was speaking at this year’s ‘GNAT Investment Forum’ – also challenged managers of the SSNIT scheme to try and improve its investments to ensure contributors get the best out of their investment in the scheme.
Speaking at the ceremony, which was organized by the Ghana National Association of Teachers (GNAT) under the theme ‘Ghana’s workers’ pensions; challenges and solutions for growth in the next decade’, he observed that SSNIT’s inactiveness in the market has been a great disincentive.
He cautioned that SSNIT’s investments are not generating the kind of returns that can sustain the scheme in some years to come.
The professor of finance also recognized that the number of ‘quality’ contributors count in growing the country’s pension scheme. In this regard, he said: “If a country is experiencing a higher unemployment rate, it has implications for pension sustainability”.
According to him, it is necessary for a lot of young people to join the scheme and contribute and make it sustainable.
The Director-General of SSNIT, Dr. John Ofori Tenkorang – also interacting with members of GNAT at the Forum, took time to share knowledge about the SSNIT scheme while clarifying some public misconceptions.
He said the SSNIT scheme is very generous since it offers unique benefits and provides value that no other pension product offers.
As part of efforts being made to improve the scheme, he said, measures have been taken to ensure the maintenance of an accurate pension payroll and pay only legitimate pensions.
Also, the scheme has deployed strategies to increase new member registration – a campaign to register self-employed persons onto it as well as reduce administrative costs through the use of technology, which has helped to save about GH¢327million.
He used the forum to advise that workers should take full advantage of the three-tier scheme, saying “It provides a very good tax advantage for everyone” while urging them to plan their retirement among others.
The president of GNAT, Isaac Owusu, in his opening remarks at the forum noted the program’s timeliness, particularly given the current economic times.