Dr Anthony Yaw Baah, General Secretary, TUC
THE GHANA Trades Union Congress (TUC) has appealed to President Nana Addo Dankwa Akufo-Addo to intervene and correct the injustice and unfairness in the implementation of Ghana’s 3-tier pension system.
In a letter dated August 24, 2020 signed by Dr Anthony Yaw Baah, General Secretary of the Ghana TUC and addressed to the presidency, the TUC stated, “We are compelled, once again, to write to you to request for your intervention to correct what we consider as injustice and unfairness in the implementation of the National Pensions Act, 2008 (Act 766).”
Starting with the unfairness bit in the payment of lump-sum benefits to SSNIT contributors who retired in 2020, it noted that under PNDC Law 247, retirees received lump-sum payment equal to 25 per cent of their total pension benefit.
Background
It continued that “when the 3-tier pension scheme was introduced in 2010, part of the contribution to SSNIT was hived off and paid into privately managed 2-tier pension schemes. Contribution to 2-tier schemes (including returns from investment of the fund) was to replace the 25 per cent lump-sum paid by SSNIT. As part of the arrangement, SSNIT was required to pay what is known as past credit (first-tier scheme) before the commencement of the implementation of the 3-tier scheme in January, 2010.”
It said from January 2020, a beneficiary’s lump-sum was being computed as (25 per cent lump-sum which was equal to past credit from SSNIT in addition to contributions to second tier schemes (including returns on investment), adding that “a significant number of our members who retired in 2020 have already received their lump-sum based on this formula.”
Analysis
According to the TUC, its analysis, based on the data it had gathered from retirees, showed that their lump-sum benefits were lower compared to what they would have received under PNDC Law 247 and noted that that was due, partly, to low past credit being paid by SSNIT based on a formula which was not clear to it.
It continued that “TUC has, on several occasions, called for a stakeholder meeting to discuss our concerns. But, no such meeting has been convened. Retirees are receiving lump-sums that do not match their contributions to SSNIT.
Government Arrears
TUC also emphasised on another concern which had to do with government arrears in respect of social security contributions for public sector workers.
“We believe that the huge government indebtedness to SSNIT is one of the factors that have compelled SSNIT to pay low lump-sum as a way of protecting the scheme in order to have adequate funds to pay monthly pensions to retirees on SSNIT payroll under the first-tier scheme.
“Sir, we believe strongly that your intervention will be timely and appropriate to avert imminent labour unrest,” it said.
Security Agencies Exclusion
It furthermore touched on an aspect that had to do with the exclusion of the security agencies.
“We have read reports in the media about Cabinet’s approval of the exclusion of security agencies from unification of pensions under the 3-tier pension scheme, as provided for in Act 766,” it said.
It indicated that such a policy would undermine the solidarity principle that served as bedrock for the 3-tier pension scheme, particularly the first-tier SSNIT scheme.
“TUC cannot support such a policy. We urge you, Mr. President, to review the policy,” it added.
BY Samuel Boadi