The Trades Union Congress (TUC) and Social Security and National Insurance Trust (SSNIT) are in a brawl over the computation of the benefits of pensioners.
According to TUC, the computation is inaccurate because it misinterprets the Pensions Law, resulting in low pensions, a situation that has rendered pensioners worse off and in unstable financial condition.
The framers of the law indicated that the lump sum is calculated as 25 per cent of monthly pensions for 144 months; whereas SSNIT calculates it as 25 per cent of monthly pensions for 83 months, instead of 144.
41.9% drop in annuity on lump sum
The difference between the application and non-application of annuity on lump sum equals 41.9%, according to the workers’ union.
TUC report indentifies gaps
TUC said an eight-member committee it set up to look into the current Pension Scheme, in its report, identified gaps in the computation of pension benefits by SSNIT for its contributors.
SSNIT rejects accusation
However, SSNIT has rejected the accusation, saying it computes benefits accurately in accordance with (PNDCL 247, Act 766 and Act 883) and on sound financial and actuarial principles and practices.
The workers’ union explained that the wrong computations affect how SSNIT recognises annual salaries, determination of annuities (regular allowance payments) and early retirement reduction.
TUC points out faults
The report faulted SSNIT for “wrong interpretation of what constitutes annual salary (36 months), early retirement reduction factor and annuity factor on lump sum,” describing it as “strange to the PNDC Law 247 and must be scrapped”.
TUC says SSNIT has misinterpreted Pension Law
The report further noted that “the SSNIT Pension is low because SSNIT has misinterpreted the Pension Law, which has resulted in low payment of pensions, thus making the contributors worse off”.
Paltry allowances and lump sums
A member of the committee set up TUC, Mr Joseph King Adu said they found reason to debunk perceptions that low salaries of workers who contributed to SSNIT accounted for the paltry allowances and lump sums pensioners received.
“The committee believes that it is a wrong perception. SSNIT has trumpeted this perception over the years to make people to believe that only low salaries are the cause of low pension annuity.
“The committee believes that, rather, it is because of SSNIT’s misapplication and misinterpretation of the law to the disadvantage of members,” he stated.
TUC wants NPRA intervention
The committee is of the view that SSNIT is not applying the law governing the pension scheme, and appealed to the National Pensions Regulatory Authority (NPRA) to compel SSNIT to compute pensions strictly based on the law and nothing else.
It argued that SSNIT has not been able to produce the legal basis for the definition of annual salary, early retirement reduction factor and annuity deduction. They only claim it is actuarial principles.
Way of declaring the annual salary faulted
SSNIT has argued that its way of declaring the annual salary (using the best of the last three years or 36 months) was favourable to the contributor, but the committee thought otherwise; it was wrong.
TUC says annuity misapplied
Touching on the annuity, the monthly pension allowances paid to contributors, the TUC report stated that the annuity of lump sum applied to deceased benefits and not retired benefits.
A member may exercise the option for a part lump sum payment of 25 per cent of his pension and a reduced pension based on the average annual salary for the three best years of a member during his working life.
SSNIT rejects TUC findings
Reacting to the TUC report, the management of SSNIT, in a statement issued by its Corporate Affairs Department, said: "SSNIT has not changed the mode of computation of benefits since these laws came into effect.
"SSNIT, which is regulated by the National Pension Regulatory Authority (NPRA), operates a transparent administration and is governed by a competent Board of Trustees which includes four members of Organised Labour, two representatives from Ghana Employers’ Association, one representative from National Pensioners Association, one representative from the Ministry of Finance, a representative from the Security Services, a Board Chairman, a Director-General and two government appointees," it stressed.
The management of SSNIT, the statement said, had since last year been engaging Organised Labour on the matters raised in relation to the computations of benefits.
The issues in reference, it said, had been referred to the NPRA by both SSNIT and Organised Labour for its review and directives.
"SSNIT awaits the pronouncements of the NPRA on these issues and would be guided by the regulator’s directives.
"We take this opportunity to assure all SSNIT contributors and pensioners that their contributions and pensions are safe and their benefits are calculated in accordance with the law".
Source: The Finder
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I am a pensioner. retired as an officer from one of the private organisations. . There's nothing wrong with the lumpsum i received. My pension is good and that's all i live on. TUC, can do better than this. stop creating panicking. SSNIT has paid my pension for 14 years and it has been good. So let us becareful with the accusations we put forth.
An organisation like SSNIT does everything within the confines of the law and calculation of benefits is part. People should stop denigrating the institution. they have been the Trustees of pensions over 50 years now. So many Ghanaians receive monthly pension from SSNIT, and alot more people receive high pensions. Those on high income do not complain , those on low income complain. Ask those on low income how much they were receiving as workers in active service. you will find out that they were receiving far less as workers than as pensioners now.SSNIT cushions such members that why they receive more as pensioners. lets educate ourselves and stop bringing some credible public institutions down.
dissolve SSNIT immediate for worker to find their on investment towards pension. Ghanaian politician are ***barred word*** and continue to steal workers pension money all the times. ***barred word***.
Let's tread cautiously in our remarks and rantings. We have demonized the state pension administrator without just cause. We may probably have to look at the fundamentals again and have a holistic approach to the issue. If there had not been SSNIT how many of the over 200,000 receiving their monthly pension on regularly basis will be receiving a monthly stream of income? It's sometimes interesting how we accuse people in their offices without much facts. In any case, why do people in the UK stay and work after 60? Who says it's their pension they use for their holidays abroad? Which state institution gives interest free loans to its workers? We have been informed that our pensions are determined by our best salaries, our age and how long we've contributed (this will indicate the percentage of our salary we will receive as pension). So if these are indeed all the factors prescribed by the law, then how much we receive is largely our making. If our basic salary is small, like i am battling with, then we should expect something small. Because the maximum we can receive as pension is 60% of our basic salary according to information on the SSNIT website and the National Pensions Act. Our actions and comments have scared majority of our people in the informal sector from contributing towards their pensions and so at age 70 and beyond we still find people struggling in the markets and other areas of the economy to butter their bread. I guess the state pension provider should educate us more especially through their one minute program on Citi FM. But our faith based gatherings are there so come and educate us and let's ask the relevant questions for a happy pension life. We owe as a responsibility to ourselves to read more and contribute meaningfully towards retirement planning and pensions for a better tomorrow.
This doesn't happen in any other advanced country. you see people coming from other places to come and holiday here a lot because they don't worry about their pension monies. You retire today in the UK and latest by 2pm, you know how much you are taking but come to our motherland Ghana and you are made to continue going to the SSNIT office for more than one year even after the bio-metric registration. this is because they sit there and use our contributions as interest free loans to themselves and so you never get to know what you are due. How many people in the SSNIT office know portfolio management to be able to manage our portfolios for us? How are our contributions invested, and what returns do we get on these investments? The people the don't understand Annuity and all those financial terms because they were put there because someone wants them to be there. Until something changes, this is what we will always get.
Why is SNNIT frustrating contributors like that? They pay themselves huge salaries and pays peanut to pensioners. I detected mistakes in my statement of accounts since 2013 and have since not been able to get SSNIT to correct them. I have been tossed between the national and the district offices since 2013 till today yet the mistakes are still intact in the statement. Its very clear that the OBS was used to cook money for some selfish individuals. I took statement from my employer to assist in correcting the mistakes but to no avail. I do not understand why its compulsory for me to be on SSNIT. Am convince that, it's only to mobilize funds for government and some selfish individuals.
NPRA please act fast pensioners and contributors do not feel secured at all.