The Social Security and National Insurance Trust (SSNIT) has announced an 11percent increment in its monthly pensions for the year, 2020.
This is made up of 6.6 percent fixed-rate and a flat amount of GHs37.38 added to all pensioners’ salary, which makes up the remaining 4.4 percent.
It means that, the minimum pension for new pensioners, beginning this January, is GH¢300 with those already on the Payroll as of December 31, 2019, who received a minimum pension of GH¢300, now having their pensions increased to GH¢357.18.
This year’s indexation rate was determined using the percentage change in the annual average Consumer Price Index (CPI) for 2019, forecast of the 2020 National Annual Price Inflation, ability of the Fund to pay and the long term sustainability of the Scheme among others.
The announcement follows a consultation with the National Pensions Regulatory Authority (NPRA) and in accordance with Section 80 of the National Pensions Act 2008 (Act 766).
SSNIT said “The approved overall indexation rate of 11% for 2020 is higher than the forecasted inflation rate of 8.0% for 2020”.
It added that 70percent of pensioners would receive 11percent or more as an increase in their pensions. Meanwhile, 98percent of the pensioners will see an increase that will be equal to or above the targeted inflation rate for 2020.
This implies that, the lowest-earning pensioners, will get an effective increase of 19.06percent and this is better known as redistribution.
Redistribution is a mechanism used to cushion members on low pensions in line with the solidarity principle of social security. Pensioners who receive low pensions is because they got low basic salaries on which contributions were paid.
This means that pensioners on the SSNIT Pension Payroll as of December 31, 2019, receiving the minimum pension of GHC300 ($52) will have their pensions increased to GH¢357.18 ($62).
The Chief Actuary of SSNIT, Stephen Yeboah, who made a presentation on the increment said “With this redistribution, the rate for the lowest-earning pensioners will come to 19.06 per cent. Seventy per cent of pensioners will receive 11 per cent or more as effective increase in their pensions; 98 per cent will receive an effective increase equal to or above the targeted inflation rate for 2020.
He continued by saying “The 2020 indexation rate was determined using the percentage change in the annual average Consumer Price Index for 2019, forecast of the 2020 national annual Price Inflation, ability of the fund to pay and the long term sustainability of the scheme among others.”
“The approved overall indexation rate of 11% for 2020 is higher than the forecasted inflation rate of 8.0% for 2020.
The overall indexation amount was redistributed at a Fixed Rate of 6.6 percent and a Flat Amount of GH¢ 37.38 for all Pensioners on the SSNIT Pension Payroll as at 31st December 2019.”
Indexation is a technique to adjust income payments in order to maintain the purchasing power of the public and cushion the vulnerable against inflation.
The Director-General of SSNIT, Dr. John Ofori-Tenkorang, said the redistribution was a mechanism applied to the indexation rate to cushion members on low pensions, in line with the solidarity principle of social security. “The low pensions arise from low basic salaries on which contribution were paid,” he explained.
Dr. Ofori-Tenkorang, dispelled claims by workers under the Trust that funds are not being invested judiciously saying SSNIT has been transparent in its dealings with workers.
He said, the Trust has and continues to use it funds and resources judiciously. The Director-General, said although there are legacy issues that precede his administration, they are working to resolve all of that. According to him, only 3.3 percent of the Trust’s investments have been non-performing saying “the concerns out there are not accurate”.
The increment will cost the Trustadditional GH¢243 million by 2020.
He added that, “Only by abandoning double standards, enhancing political mutual trust, reaching strategic consensus, and promoting exchanges and cooperation, can we effectively curb and combat terrorism and extremism in the interests of world peace and stability.”
SSNIT in December 2019, paid a total of about GHc224 Million to about 216, 000 Pensioners on the payroll bringing its total expenditure on benefits payment for the year to about GHc3 billion.