Professor Adei Speaks On Pension Scheme

Professor Stephen Adei, former Rector of Ghana Institute of Management and Public Administration (GIMPA), has observed that criticisms that pension paid by SSNIT was inadequate to meet the needs of pensioners was not the fault of the institution. He said by law, Social Security and National Insurance Trust (SSNIT) had no choice as the level of annuity payment and the level of benefit were unrelated to contribution by a member as it had been fixed by law. Prof. Adei made the observation on Wednesday at the Fourth Quadrennial Congress of the SSNIT Senior Staff Association (SSA) at Sogakope in the Volta Region. The conference on the theme: Two Decades (1991-2011) of National Pensions Administration in Ghana- Challenges of the Reform and Role of SSNIT SSA”. He said the formula for calculating lump sum was questionable and that required a review. Prof Adei therefore, called for a four-tier which would be funded through Value Added Tax (VAT) or some nationwide source that would provide social security for the aged in Ghana. “As a nation, we will need a social safety net that covers all pensionable age people in due course to be financed from collective sources such as an additional VAT, Consolidated Fund and specific revenue sources as the economy shrinks, the extended family ties weaken and growing number of retirees emerge,” he added. Professor Adei noted that Pension Schemes had suffered major setbacks as a result of political interference and operational efficiency. He said it was difficult to explain why government did not make any contribution to the scheme yet meddled in the affairs of SSNIT. Prof. Adei pointed out that SSNIT had suffered from attempts by governments to politically influence key appointments and investment decisions, all of which limited operational efficiency of SSNIT, including a lot of investment to government securities and financial albatross such as the student loan schemes. Notwithstanding the challenges of SSNIT, Prof. Adei commended the Trust for prompt payment of pension scheme in recent times, stressing that, pension funds had become most important source of long term capital for development when it comes to poverty alleviation and old age insecurity. However, he said SSNIT could perform better by being proactive, innovative and creative, stressing that, “There is no limit to innovative possibilities”. He said, “The recent reforms may reduce your overall responsibility and given the small coverage of the scheme in Ghana of restriction as of your activities, but the reform could be turned into advantage whereby you will work and improve average returns on investment and enhancement of benefit beyond legislative parameters". Prof. Adei was of the view that in the interest of transparency and fairness, SSNIT should be allowed to create a subsidy to compete for the second and third tier funds. On the new reforms, he noted that if it was properly managed, the nation and future retirees stood the chance to benefit but quickly pointed out that, SSNIT and its employees would be required to use more bricks with less straw and mortar.