Wednesday, 16 January 2019

SSNIT increases pensions pay by 11%

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Adnan Adams Mohammed

The Social Security and National Insurance Trust (SSNIT) has increased the monthly allowance of pensioners in the country between 9 and 11 percent starting January 2019.

The increment comes in two folds, 9% flat increment across board for all pensioners and additional 2% at a flat amount of GH¢15.89 to pensioners with low income. This makes the low income pensioners increment 11% at the end. 
  
The increase will cost SSNIT GH¢212 million.

What this essentially means is that the least amount a pensioner will receive beginning January 14, 2019—as they are paid every 14th day of every month—will be GH¢300, compared to GH¢287.55 for workers using the new minimum wage as the basis of calculation.

Steven Yeboah, Chief Actuary at SSNIT explained that, the redistribution of the two percent was to cushion low income earners in line with the solidarity principle of social security.

“The effect is that 80 percent of our pensioners are going to get 11 percent and our lowest pensioners will get as much as 14.76 percent, as overall increment in their pensions,” he said, adding that the new minimum monthly pension for 2019 will be GH¢300, compared to the minimum wage of GH¢287.55.

Mr Yeboah, who made a presentation on the indexation, said the process of indexation was in line with the National Pensions Act 2008 (Act 766, Section 80) which mandates it to annually review pensions.

He said the indexation, a technique to adjust pension payments in order to maintain pensioners’ purchasing power, was done taking into account of wage inflation or price Inflation.

The process looked at factors like average salary growth of active contributors, which was 12.66 percent in 2018, average change in consumer price index; 9.4 percent in 2018, as well as the liquidity and sustainability of the fund.

Speaking to the media in Accra, Director General of the Trust Dr. John Ofori-Tenkorang assured pensioners that his outfit has the needed financial muscle to effect the increment made for the year.

“The Trust will be liquid enough to pay this. In arriving at this conclusion, we take into account liquidity and sustainability.

“We look at what our forecasted receipt will be; we look at how much we are going to pay and what we are going to get from our investee companies through dividends, and we put it all together to see whether we can pay whatever amount we come up with. So, with the new indexation, part of it is going to come from contributions and part from investments.

“The object of indexation is to make sure that pensioners’ purchasing power will increase. Two factors which affect this is the general level of price increase in goods and services; and the law also enjoins us to take into consideration the salary increases of working people as a guide in determining the indexation,” he said.

As part of the programme, SSNIT was presented with cheques from two of its shareholders. The two companies, Ghana Agro Foods Company Ltd. (GAFCO) and Gulf Consolidated Ltd., paid GH¢400,000 and GH¢712,509 respectively as their dividend.

In the case of GAFCO, this is the first time it has paid dividend to the Trust since it acquired a 40 percent stake in the company in 2005.

With Gulf Consolidated Ltd, for the past 13 years it has always paid dividends annually to SSNIT for the 42 percent stake it owns in the company.

Overall, the Trust’s investment portfolio registered a 5.77 percent real return in 2017, above a target of 3.25 percent as against -5.93 percent in 2016.

Dr. Ofori-Tenkorang assured all stakeholders that management of the Trust is committed to restructuring its investments and invest more in low -risk but high-yielding investment portfolios.

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