Frequently Ask Question

So how will my pension benefits be determined?

Your pension will be calculated as before. The current law however has hived off the lump sum payments form SSNIT and will now be paid by your tier 2 trustee. In other words, SSNIT will continue to pay monthly retirement benefits. It also means that, the amount of lump sum you will receive will depend on the following factors

  • How much contributions you accumulate by the time you are retiring which will mostly be attributed to your salary history and how long you have worked and
  • How good your Trustees is in terms of its fund management and rate of return on your contribution.

You will thus receive two payments. A one -time lump sum payment from your TRUSTEE and a monthly payment from SSNIT.

What happens with the other existing pension systems or the old arrangements?

The new law creates a roadmap for the eventual integration or cessation of all existing pensions systems. As a result, all those on the old and other pensions systems will be placed on the new scheme such that they will not lose anything or be disadvantaged.

How is the pensions funded?

It is jointly funded by the employer and employee in the proportions of 13.0% and 5.5% respectively. They are however vested in the employee. This is for the tiers 1 and 2 and for some companies the tier 3

What are the key features of the new law?

The key features can be captured in four parts

  • The three tier scheme, namely tier 1, tier 2 and tier 3. Tiers 1 and 2 are mandatory and tier 3, voluntary.
  • The introduction of NPRA- the regulator for the industry
  • The opportunity for new industry player namely: trustees, fund managers and custodians.
  • An increase of 1% in pensions contributions. So before you contributed 5% but now you are contributing 5.5% and your employer 13% from 12.5%.

How different is this Law from the previous one?

This new Act, is an improvement of the old one. It also was crafted based on those of other countries whose laws are seen to have delivered the right results. It is also designed to cure the ills of the other pensions laws. For example, it has reduced the number of months a contributor needs to work to qualify for full pensions from 240 to 180. It also makes provision for private sector participation in pensions management like in many other places.

Why do we need a new pension system in Ghana?

The old pensions system was designed based on certain assumptions. Today, a lot of these assumptions do not hold anymore therefore the need to look at a new law. In addition, people today are living longer and demanding more from their contributions. 

That reality, combined with volatile rates of return on investments, made the case for a new law compelling. It was also important that government took the necessary action to safeguard for the future wealth of the citizenry.

This new pensions system is secured, reliable, and transparent. It is also affordable and sustainable.

What were the challenges of the old Pensions system?

The old pension’s law had a few limitations and challenges and as a result did not fully meet the requirements and expectations of a section of the public. Some of the key issues of concern were:

  • The amount of lump sums paid were seen to be uneconomical
  • The large  informal sector was not catered for
  • Low involvement of contributors
  • No regulator of the industry

The new Law therefore was aimed at addressing all these limitations and more.

Look deep into nature, and then you will understand everything better.

- Albert Einstein

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