Parliament has been urged to, as a matter of urgency, amend the laws on pensions to ensure the financial sustainability of the Social Security and National Insurance Trust (SSNIT) for the benefit of present and future generations.
It has also been proposed that people who have strong financial and investment backgrounds be appointed to the SSNIT Board, while the government also makes efforts to pay the debts it owes the trust.
These were contained in the report of a research conducted into the sustainability of the pension scheme by the Africa Centre for Retirement Research (ACRR), a non-profit policy research think tank.
The research was meant to contribute to shape policy in the areas of social protection, retirement and pensions.
Policy guidelines
Sharing the findings of the report at a media briefing in Accra yesterday, the Executive Director of ACRR, Mr Abdallah Mashud, called on the National Pensions Regulatory Authority (NPRA) and SSNIT to hasten the process of developing administrative and operational expense policy guidelines that would regulate the expenditure of the trust in the ultimate interest of the Ghanaian worker.
He said changes in demographic and economic factors in recent decades were creating serious sustainability challenges for pension systems around the world, of which Ghana was not excluded.
To address the challenges and thereby prevent the collapse of public pension systems, he said, governments and policy makers in other parts of the world had embarked on the necessary legislative reforms.
The executive director said Ghana could not afford to lose out, hence the need for the necessary reforms to make the scheme sustainable.
Actuarial valuation
Making reference to Section 53 of the National Pensions Act, 2008 (Act 766), Mr Mashud suggested that an external actuarial valuation of the SSNIT scheme be carried out every three years.
He said the last two actuarial valuation exercises carried out in 2014 and 2017 by the International Labour Organisation (ILO) and the Actuarial Department of SSNIT indicated that the scheme was facing medium- to long-term sustainability danger.
He noted that the factors that had affected the scheme, based on the actuarial opinion, were economic and demographic, over which there was no control, while poor investment outcomes, high government indebtedness to the trust and high administrative and operational cost could be addressed.
Retirement age
Mr Mashud said the actuarial report also proposed an increase in the retirement age from 60 to 62 over a 12-year period, starting from 2025 to 2037, to have a positive impact on the financial sustainability of the scheme.
“The ACRR is, however, of the opinion that considering SSNIT pensioners’ post-retirement mortality pattern, increasing the retirement age by two years will result in more members dying in service,” he said.
To address the solvency concerns of the SSNIT scheme, he called on Parliament and other relevant stakeholders to examine the recommendations in the actuarial reports and commence discussions to address the financing shortfalls of the scheme.
Rising cost
The Chairman of the National Pensioners Association (NPA), Mr Sesi Seth Ametefe, said the cost of pensions was rising all over the world due to changes in demographic and economic factors, including rapidly ageing populations.
Therefore, he said, the NPA wanted policy makers to begin to consider the various proposals on pension reforms to improve the long-term sustainability of the SSNIT scheme.
Mr Ametefe commended the current SSNIT administration for the pensioners payroll clean-up exercise that had improved the mismatch that existed between the scheme’s assets and its liabilities.
Nevertheless, he cautioned that it was not enough for SSNIT to simply deactivate members of the NPA from the payroll but to go a step further to confirm the state of life of the affected members.
He noted that recent reports indicated that out of the 41,508 pensioners deactivated, only 17,175 returned to the payroll.
“That appeared to suggest that over 18 per cent of deactivated members who existed on the payroll are dead,” he added.
The statistics, he said, were alarming and called on SSNIT to, one way or another, confirm the state of life of pensioners.
Disability status
A board member of the ACRR, Ms Mawunyo Yakor-Dagbah, who is also the President of the Ghana Federation of Disability Organisations, called on SSNIT to include the disability status and type of disability in their member registration process.
That, she said, would facilitate the federation’s drive to build disaggregated data on persons with disabilities, adding that SSNIT could be a reliable source of data for effective policy formulation and programmes for people with disabilities as the country moved to attain social and economic inclusion in all facets of human existence
