Accra, September 21, 2017//-The Social Security and National Insurance Trust (SSNIT) scheme will not be sustainable by 2030 if the dynamics of the scheme or the contribution rate does not change, a former Managing Director (MD) of SIC Insurance Company (SIC), Mr Peter Osei Duah, has said.
Currently, the old population that receives SSNIT benefits keeps increasing, while the number of contributors keep dwindling, raising fears that if the trend persists, there will not be enough funds to run the scheme beyond 2030.
Speaking on the sustainability of pensions at the Graphic Business/Stanbic Bank Breakfast Meeting in Accra yesterday, Mr Duah said, “The most critical hindrance to the sustainability of the SSNIT pension scheme is the changing demographics where the older population who enjoy SSNIT retirement benefits are living longer and enjoying the benefits, while the workers who are supposed to be contributing for these retirees are rather dwindling.
“When this happens, then it means you are in a big trouble because as time goes on, the scheme becomes stressed and not sustainable.
“So something needs to happen between now and 2030 to ensure the safety and continuing existence of our SSNIT scheme,” he stressed.
Need for changes
Mr Duah, therefore, called for the need to make certain changes to the scheme to ensure its sustainability beyond 2030.
“In the United States of America (USA) for instance, this has happened, and they have had to make certain changes to their scheme to make it more viable, so our scheme also has to change.
“Normally what happens when you are in such a situation is that you either increase the contribution rate by law or you decrease the benefits under the scheme,” he said.
He said another way was to also find ways to increase youth employment, but added that it would not have much effect.
Mr Duah said the best way to address such a problem was to increase the normal retirement age or the government should come up with a supplementary scheme with funds from the consolidated fund.
“But as we grapple with this challenge, we can take a cue from other countries. The USA has increased its normal retirement age from 65 to 70 years and we might have to consider this going forward. This will give us more time to accumulate a little more funds to pay the benefits when they become due,” he explained.
Strong pension regime
A partner of Bentsi-Enchill, Letsa and Ankomah, Ms Angela Akosua Gyasi, also called for a strong pension regime which would be capable of providing capital for the government’s infrastructure programmes and improve the capital markets.
“If we are going to have a robust pension system, we don’t only have to have a pension system that is right for retirement people but one that provides coverage of all Ghanaians and with adequacy of benefits,” she said.
She said although there was adequate provision in the Pensions Act that covered people in the informal sector, majority of Ghanaians were still without pensions.
Management of contributions
In his opening remarks, the MD of the Graphic Communications Group Limited (GCGL), Mr Ken Ashigbey, underscored the need for the better management of pensions in the country.
“Contributors expect their contributions to be managed well in order to result in a significant growth in returns to get good pensions on retirement,” he stated.
He said the significance of the pension funds to the survival of a country’s citizenry was the reason why most governments across the world had developed laws to protect the fund.
Mr Ashigbey, therefore, urged the country to develop an interest in the management of the pension funds in order to secure a successful future.
“I think that citizens need to know and understand what their pensions law says, whether it truly protects their future and also contributes to the economic growth in a manner that will meaningfully affect their lives both in and after employment,” he said.
Graphic
