The Social Security and National Insurance Trust (SSNIT), in consultation with the National Pensions Regulatory Authority (NPRA), has indexed monthly pensions upward by 10 percent for the year 2022. This increment is in line with Section 80 of the National Pensions Act 2008 (Act 766).
Per the Trust, all pensioners on the SSNIT pension payroll as of December 31, 2021 will have their monthly pension increased by a Fixed Rate of 9.68 percent with an additional redistributed flat amount of GH¢3.44. The 2022 indexed monthly pensions are equal to or above the targetted inflation rate for the year.
Pension indexation is a policy for upward review of pensions in payment as a means of preserving the purchasing power of pensioners by annually adjusting monthly pension benefits, in line with an index of consumer prices or changes in average earnings of active contributors or a combination of both.
“The effective increase in pensions will therefore range from 9.683 percent for the highest-earning pension to 10.83 percent for the lowest pension earner,” the Trust said.
“Accordingly, the highest-earning pensioner as of December 31, 2021 will receive GH¢142,565, and pensioners receiving the minimum pension of GH¢300 as of December 31, 2021 will have their monthly pensions increased to GH¢332.48,” SSNIT explained further.
“In addition, the Scheme’s minimum pension for all new pensioners effective January 2022 will be GH¢300. This means pensioners whose computed monthly pensions fall below GH¢300 will be placed on this minimum.”
Under this indexation, the redistribution mechanism is applied to the indexation rate to cushion members on low pensions in conformity with the solidarity principle of social security. Usually, low pensions arise as a result of low basic salaries – that were declared to SSNIT – on which contributions were paid.
The pension a member enjoys under the First Tier Scheme is dependent on the Basic Salary (on which contributions were made) and the number of months one has contributed to the Scheme. Last year, the Trust spent about GH¢3.6billion in benefits payments to the about-225,000 pensioners on its pension’s payroll.
Notwithstanding government indebtedness to SSNIT, the Trust has raised concern over private sector indebtedness – which is in excess of GH¢230million as of the third quarter of 2021. This is expected to go up further if the Trust retrieves all outstanding contribution reports and updates inspections on all establishments.