The Social Security and National Insurance Trust (SSNIT) has increased monthly pensions upwards by 10 per cent for the year 2022.
The decision leading to the increase was taken in consultation with the National Pensions Regulatory Authority (NPRA), and is in accordance with Section 80 of the National Pensions Act 2008 (Act 766).
The increase will take effect this month, with all pensioners receiving their payments on the third Thursday of each month.
This means that the highest-earning pensioner as of December 31, 2021 will receive GHC142, 564.97, from an initial sum of GHC129, 979.51, while pensioners on the minimum pension of GHC300.00 will see their monthly pensions rise to GHC332.48.
SSNIT acting Chief Actuary Joe Poku, in a presentation at a press conference yesterday in Accra, said that all pensioners on the Trust Pension Payroll as of December 31, 2021 would have their monthly pension enhanced by a fixed rate of 9.68 per cent, plus a redistributed flat sum of GHC3.44 in a presentation.
As a result, the effective pension increase would range from 9.683 per cent for the highest-earning pensioner to 10.83 per cent for the lowest-earning pensioner.
In accordance with the solidarity principle of social security, the redistribution is a technique applied to the indexation rate to cushion members with low pensions.
“We make sure that the increase matches inflation rate for the year in which these pensions are paid. So, for 2022, the target inflation rate is 9.68 per cent, which means every pensioner sees an increase in their pensions by that amount to match inflation,” he explained.
“If we are indexing pensions by 10 per cent and everybody is getting 9.68 per cent, then there is a difference of 0.32 per cent. That 0.32 per cent corresponds to a certain amount of money and that amount of money is shared equally among all the pensioners. And when you share that amount of money the 0.32 per cent represents, then you get GHC3.44 in addition to their 9.68 per cent,” Mr Poku added.
Low pensions, he claimed, are the result of low basic salaries (as reported to SSNIT) on which contributions were paid.
Starting in January 2022, the minimum pension for all new retirees will be GHC300.00. This means that pensioners whose monthly pensions are less than GHS300.00 will be placed on the minimum.
In addition, Mr Poku informed reporters that the cost implications for the 2022 indexation are GHC308 million, a 27 per cent rise over the GHC243million spent in 2021.
He pledged the commitment of the management of the Trust to continue working hard to ensure positive annual indexation for retirees while keeping its long-term viability in mind.
“The Trust remains committed to paying all legitimate benefits accurately and timeously,” the acting Chief Actuary added.
About the indexation
Indexation is a technique used to adjust pensions in order to maintain the purchasing power of pensioners
Section 80 of the Pensions Act stipulates: “the Trust shall annually review the pension payment which shall be indexed to wage inflation rates of active contributors or another rate determined by the Trust in consultation with the Board of the Authority.”
Percentage change in the annual average Consumer Price Index (CPI) for 2021, percentage change in average Wage of Active Contributors in 2021, long term sustainability of the Scheme and liquidity-ability of the Fund to pay were factors that informed the 2022 indexation rate.
Read Also: NPA to prosecute fuel smugglers