Professor Stephen Adei, a senior economist, has called for a new pension scheme that will cover all Ghanaians in their old age rather than the existing one which benefits only contributors.
He explained that the new pension should serve as a fourth tier which would complement the existing three-tier pension scheme.
“As a nation, we need a social safety net that covers all people at their pensionable age,” said Professor Adei in an interview after addressing the senior staff association of the Social Security & National Insurance Trust (SSNIT).
A National Pensions Law enacted in 2008 led to the introduction of a three-strand pension scheme comprising two mandatory schemes and one voluntary scheme popularly referred to as first tier, second and third tier.
The first two tiers under the scheme are mandatory while the third tier is voluntary.
The first tier holds the mandatory contributions of SSNIT for national health insurance and monthly pension payments after contributors’ retirement.
Additionally, the second tier is a mandatory contribution to an individual’s personal retirement savings while the third tier is a voluntary contribution to an individual’s personal retirement savings where after retirement, the individual receives monthly payments.
Funding for the fourth tier, he said, should be mobilized from a collective source such as an additional Value Added Tax (VAT) and “some nationwide sources to provide social security for all old age people in Ghana.”
To him, it is important to consider the new pension, as currently the extended family ties are weakening, rural economy is shrinking and the number of retirees is growing by the day.
Prof Adei additionally notes: “This will require the government to be involved in the national security system at various levels, including making direct financial commitment to the scheme.”
Also, government should put in place the right regulatory framework to ensure sustainability and financial integrity.
By Emelia Ennin Abbey