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This follows a decision by the Social Security and National Insurance Trust (SSNIT) to increase the monthly pension by 11 per cent for this year.
The increase was done in consultation with the National Pensions Regulatory Authority (NPRA) and in accordance with Section 80 of the National Pensions Act, 2008 (Act 766).
Section 80 of Act 766 stipulates: “The trust shall annually review pension payment which shall be indexed to wage inflation rates of active contributors or another rate determined by the trust, in consultation with the board of the authority.’’
As a result of the increment, pensioners who were on the minimum monthly pension of GH¢276 in 2018 will now receive GH¢316.73, while the minimum monthly pension for new pensioners from January 2019 is now pegged at GH¢300.
The Director-General of SSNIT, Dr John Ofori Tenkorang, announced the increment at the 2019 pension indexation media briefing in Accra on Tuesday.
Indexation
Indexation is a technique to adjust pension payments in order to maintain the purchasing power of pensioners. It usually leads to an increment in pensions.
The 2019 pension indexation was pegged at 11 per cent, with nine per cent as fixed rate and two per cent being redistributed as a flat amount of GH¢15.89 to benefit those earning lower pensions.
Giving more insight into the mechanism, Dr Tenkorang revealed that the trust would incur an extra cost of GH¢212.16 million for the year due to the increment, which he said had already been factored into its budget for the year.
He said before the indexation, SSNIT took into consideration the average salary growth of active contributors, which stood at 12.66 per cent; the annual average change in the consumer price index, which was 9.5 per cent, and the financial strength and sustainability of the scheme.
“The aim of the indexation is to make sure that pensioners’ purchasing power is preserved. So the amount of money the pensioner has today should be able to buy what he bought last year or even better.
“What we have announced today is going to take effect immediately. Pensioners who are going to be paid on January 17, 2019 are going to see their pensions increase by the various amounts, and it is going to run through 2019,” he said.
SSNIT will work harder
Dr Tenkorang said SSNIT was committed to working harder than before to better the lot of pensioners and also ensure the long-term sustainability of the scheme.
“SSNIT has a lot of obligations that we have to meet. Our pensioners rely on us for good pensions. We will continue to work hard to guarantee positive annual indexation for pensioners, bearing in mind the long-term sustainability of the scheme,’’ he said.
Payment of dividends
In a related development, two companies in which SSNIT is a majority shareholder used the occasion to present GH¢1.112 million to the trust as their dividends for 2017.
The companies are the Ghana Agro Foods Company Limited (GAFCO), which presented GH¢400,000, and the Gulf Consolidated Limited (GCL), an estate development company, which presented GH¢712,510.
The Board Chairman of GAFCO, Professor Joe Amoako Tuffuor, presented the cheque on behalf of his outfit, while the Board Chairman of GCL, Mr Kwabena Abankwa Yeboah, did same for his organisation.
SSNIT owns 40 per cent in GAFCO, which it acquired in 2005, and a 42 per cent stake in GCL, which it acquired in 1992.
Dr Tenkorang received the cheques and thanked the two companies for working hard to declare dividends, which he said would sustain the confidence their investors had in them.
“Our investments must step up because the scheme has matured and contributions alone are not enough to pay pensions. I entreat you to do more,’’ he said.
