SSNIT Owed GH�218.93m

The Social Security and National Insurance Trust (SSNIT) is cumulatively owed GH? 219.93million in unpaid contributions by government and private-sector employers, representing 6.4% of the Trust�s net assets.

Of the total debt, the Controller and Accountant General�s Department which pays contributions on behalf of government workers owes GH?113.72 million -- representing 51.9% -- while government subvented establishments owe GH?23.2 million, representing 10.6%.

In all, the public sector accounts for 62.5% (GH?136.93million) of the debt with the remainder owed by private-sector employers, according to the Trust�s annual report for 2011 published last week.

SSNIT said the indebtedness results from the failure of some institutions and companies to pay their workers� contributions, which has been worsened by the imposition of penalties on the arrears.

Though the debt is lower than in 2010 when GH?254.05 million was owed, the situation poses a threat to the Scheme -- especially as reform of the pensions system has thrown up new financial challenges for the Trust.

Dr. Frank Odoom, Director-General, said in Accra at SSNIT�s seventh stakeholders� forum that the current indebtedness -- coupled with the reduction in the minimum number of years of contributions require for a person to qualify for retirement benefits -- has put pressure on the Scheme to register more members, as it now has more workers coming for their pensions earlier.

�With the implementation of the new pension reform, there will be a resultant increase in the benefit structures. Without the corresponding increase in contributions, the situation will ensure a reverse in investible funds to the Scheme,� he said.

In the new SSNIT Pension Scheme, which is known as the first-tier under the current three-tier pensions regime, a contributor qualifies for a full pension if he is at least 60 years old and has made a minimum contribution of 15 years in aggregate, down from 20 years in the old system.

Board Chairman of SSNIT, Mr. Kwame Peprah, echoed the concerns of the Director-General. �The gap created by increasing the benefit payment without the commensurate increase in contributions will actuarially create difficulties for sustainability of the Scheme,� he said.

Previously, SSNIT received 17.5% of workers� monthly basic salary as contribution, but under the new scheme SSNIT gets 13.5% while another 5% is transferred to private pension fund managers under the second tier.

Subsequently, SSNIT also remits 2.5% out of its 13.5% to the National Health Insurance Authority (NHIA) for the member�s health insurance.

Mr. Odoom said SSNIT intends to ensure sustainability of the Scheme by taking steps to recover the arrears, which will include aggressive enforcement of compliance rules and prosecution of defaulting employers in the special Saturday courts.

He said SSNIT is also negotiating with some defaulters for payment of arrears. He assured that the Trust is embarking on a vigorous membership drive and will introduce more effective interventions to reduce the volume of contributions in arrears, as well as diversify investments into areas that will yield superior returns to the Scheme.

SSNIT, he said, is expanding its investments into the power-generation sector and will increase its commercial properties portfolio to take advantage of the surge in real-estate demand as the economy expands.

SSNIT�s investment strategy, he added, will aim to achieve a real return of at least 2.25% on its total portfolio, which stood at GH?3.42billion at the end of 2011.

Source: Thebftonline.com