The Minister of Employment and Labour Relations, Mr Ignatius Baffour Awuah says the year 2020 marks the commencement of decumulation or the full payment of pension benefits under the Three-Tier Pension Scheme.
At a press briefing in Accra on Wednesday, September 16, 2020, the Minister said effective January 2020, the Three-Tier Pension Scheme begun the payment of benefits to retirees as and when due.
He said every pensioner from January, 2020 is to receive a monthly pension from SSNIT, past credit from SSNIT (accumulated value of contributions as of 31st December 2009) and Tier 2 lump sum benefit from the Occupational Pension Schemes.
The Minister added that, under Tier 3, Corporate Trustees are paying benefits to retirees as and when due.
“One of the many important lessons we can learn from this pandemic is the urgent need to strengthen our social protection systems. The coronavirus pandemic coupled with government’s partial lockdown exposed the weaknesses in our systems. A large proportion of workers and their families, particularly those working in the informal sectors, could not cope during the lockdown due to low or inadequate income. This is primarily due to the absence of alternative income sources, low coverage of social security or insurance“.
Mr Baffour Awuah said in the current dispensation, the most common form of social security or insurance is pension. He said it is therefore important to give serious attention to issues relating to it.
The Minister disclosed that Ghana’s pension industry has been impacted by the outbreak of the coronavirus pandemic. He said lay-offs, job losses and breaks in the operations of many businesses are expected to affect pension contributions for the year 2020 in all the Three-Tiers. “NPRA has already begun an assessment of the effect of the pandemic on the industry”, he said.
One of the major challenges of the sector, according to the minister, is the low coverage of pensions, as its coverage for workers continues to be very low. According to him, data from SSNIT indicates that about 1.6 million workers are enrolled onto the First Tier (SSNIT Scheme) as against the 11.2 million working population (GLSS 7, 2019). He said this is due to the fact that a majority of the 71.3 percent informal sector workers are not covered by any form of social security or pension.
“Pension coverage of the informal sector is very low. The current enrolment from the informal sector is approximately 232,000 representing about 3 percent coverage of the sector.