Remember the time when but for your nanny being at home with the kids, you could never have made it to that critical meeting that got you that business deal? Or, in your case, was it your gardener’s quick response in administering first aid and taking your daughter to the hospital when she sprained her ankle? Or maybe, your mum cancelling her review appointment with the doctor to take care of your 3-month-old baby so that you could attend the interview that got you your current job?
These scenarios and similar ones may have happened in your life at a point in time. And I am sure you remain grateful to the people who were on hand to assist you, even several years down the line.
But think about this, as that nanny goes about her daily chores, energetically and diligently, have you thought about how her future may look like when she is old and weak, cannot work, and may not be in your employment anymore? How about the cook, the cleaner or the driver, or even that favourite waakye seller in your neighbourhood? All these people form part of a significant constituent of Ghanaians in the informal sector-about 85%, who have no pension cover. Their future is uncertain in terms of income security.
Now, let us bring it even closer home. How about your mum or dad? Are you confident that they will have enough pension income to live on when they retire? Or do you and perhaps your siblings have to shoulder that responsibility? If your parents are already retired, are you able to support them financially like you genuinely want to?
Old-age income security is a challenge for millions of Ghanaians and primarily those in the informal sector. Several reasons account for this situation, a critical one being the unavailability of pension products, previously, that could cater to their peculiar needs.
However, the pension reform of 2008, which birthed the 3-Tier pension scheme, made a provision for informal workers, the personal pension scheme. So currently, there is the opportunity for them to also save towards their retirement. The personal pension scheme was designed as a voluntary pension product to cater to the erratic nature of their income, which means that they can save any amount at any time. This scheme is unlike Tiers 1 and 2, which are mandatory and have a fixed contribution percentage.
Although this product targets mainly informal workers, formal workers can also sign up to enhance their pension benefits. So indeed, the new reforms aim to ensure that every Ghanaian worker has something to fall back on in retirement.
But the question is, are informal workers financially sound such that they can conveniently put money aside towards retirement? Or is it rather a daily struggle to even put food on the table, let alone think of the future? The answer for most will undoubtedly be the latter. Again, for others like domestic hires who are in some form of “formalized” employment, are their incomes enough for them to save some? And in cases where the income is enough, how financially literate are they to recognize that deliberately putting money aside towards their future is the only way to a better tomorrow?
So, the fact is that many people out there do not have any pension in place and will end up being in difficult situations when there is no one to care for them. But fortunately, many people tend for and are responsible for the wellbeing of such people and can therefore take deliberate steps to make life in old age very comfortable for them. And even more exciting is the fact that there is an innovative pension solution that makes doing this good very satisfying and heart-warming to boot!
Our Innovative Pension Solution- iCare Pension
iCare Pension is an innovative feature of the PPT Personal Pension Scheme that allows anyone- such as a family member, employer of a domestic worker, etc. to quickly set up and contribute to the pension of someone they care about. The one who makes the payment on behalf of another is referred to as the donor, and the one on whose behalf the payment is made is referred to as the recipient. A critical component of the product design is that it allows the recipient to make payments to add up to what is made on their behalf.
It was developed based on the Personal Pension Scheme design, a voluntary pension scheme that allows anyone to save any amount at any time of their convenience towards their retirement. iCare pension follows the same principles and gives the same benefits. However, in this case, it allows someone (a donor) to do it on behalf of another (Recipient), thereby bridging that critical gap of old age poverty that some people are likely to suffer in retirement.
Age Eligibility for Recipients
Anyone who falls within the legal pension age bracket between ages 15 to 55 is eligible. What this means is that a parent can set this up for their child and vice versa. Another example can be a friend for a friend, a sibling for a sibling, an informal employer for an informal employee such as a nanny, a cook, cleaner, chef, gardener, etc. An acquaintance can also do it for an acquaintance, e.g., someone setting it up for a hawker they occasionally buy from or from the petty trader in the neighbourhood or even as a gift of seed money for a contract worker so they can continue saving up on it themselves. Essentially anyone can do it for anyone.
Contributions towards iCare are voluntary and may be made based on the recipient’s retirement goals. It may also be made based on how much the donor can conveniently pay for them.
Each contribution made is split into two equal parts and credited to 2 separate accounts. They are:
- A Savings Account -The recipient can withdraw from this account six months after the initial contribution. This feature has been enabled on the product to allow members to attend to urgent financial needs.
- A Retirement Account- The recipient can make withdrawals from the retirement account only when they attain the retirement age or when specific contingencies occur (i.e., Old Age, Invalidity, or Death)
The benefits of setting up an iCare pension for someone are not limited to the contribution made and the withdrawal window. The recipient also earns;
- Interest on contribution
- Lump-sum payout upon retirement
- Life Insurance Cover
Now, let me expand on the Life Insurance Cover a bit more as this is exclusive to People’s Pension. It is the first of its kind on the Ghanaian pension landscape. It entitles the nominated beneficiaries of a deceased member (in this case, the recipient) to a sum equivalent to four times the total contributions made by the dead member during the preceding calendar year.
We give out this money to, for instance, ensure that if there are any children of school-going age left behind by the dead member, their education will not be cut short. The beneficiaries, therefore, receive this and the total funds contributed by the dead member for the entire period they were on the scheme and the interest accrued.
How to register
Registration for iCare can be done through a USSD platform. All one needs to do is dial *789*111# on their phone and then follow the prompts. This process allows us to receive essential information such as the recipient’s phone number and details on contribution such as amount, frequency, etc. Then a contribution is made through the mobile money platform to validate the registration.
For the other registration option, one can fill a google form on our website and share all the relevant details about the recipient and the contribution amount. A credit or debit card is for paying contributions. A complete onboarding will then be done for the recipient by our Customer Engagement team to create a pension account to make subsequent payments.
How to contribute
The donor or recipient can make contributions via mobile money or through a credit or debit card. Here, the payment frequency is indicated at the registration stage; so, it will be deducted automatically for recurring or repeat payments, whereas one-off payment will be just that until the donor initiates a new one.
For a third-party-enabled product like this, questions may linger about who (donor or recipient) can access scheme information and make claims on funds. The simple answer is the recipient has the sole right to scheme information and the funds. The donor’s involvement is only at the initial set-up and then the contribution stage. They cannot at any time access or request any information on data or funds paid into the recipient’s account. The recipient has exclusive access to the scheme. When the recipient dies, their nominated beneficiary(ies) will have access to the funds.
The fact remains that saving money towards retirement will never be easy for low-income earners and people in less formalized employment. It is also a fact that there needs to be a lot more awareness creation and an aggressive collaborative effort towards pension literacy and education to expand coverage.
That said, it is also an undisputed fact that People’s Pension has already developed iCare Pension as a relevant and innovative response to this problem. This innovation will ensure that most Ghanaians can look forward to a better tomorrow. An innovation that proves that saving money for retirement is possible when planned well and, most importantly, can be done for those who cannot by those who can.
Who do you care for/about? Give them a gift of a lifetime. Sign them up on iCare Pension on *789*111# or our website on www.peoplespension.global.
About the Column.
“A better tomorrow” is a retirement-focused monthly publication written by People’s Pension, a leading and licensed corporate trustee. The aim is to provide relevant pension and retirement planning education, information, and tips to enable Ghanaian workers to prepare adequately for life after retirement.
We also aim to make retirement planning and saving easy, fast and secured for you by providing you with customized and digitally driven pension products that will enable you to transition seamlessly from work life to retirement. We believe that everyone deserves a better tomorrow, and we work tirelessly to ensure that.
The author is the Head of Communications at People’s Pension. She can be reached via mail :[email protected]