The Social Security and National Insurance Trust (SSNIT) has increased monthly pension payments by an average of 25 percent for this year.
The upward adjustment, which will take effect this month, reflects changes in inflation and minimum wage SSNIT said, adding that it also factored-in the fund’s sustainability. The decision will see some 234,000 legitimate pensioners on its payroll have their monthly benefits increased by a fixed rate of 19 percent, with an additional redistributed flat amount of GH¢73.58.
“It is our duty to ensure that our pensioners are able to live comfortably and maintain their purchasing power. We believe that this increase in pensions will go longer to achieve that,” SSNIT’s Director-General, Dr. John Ofori Tenkorang, said in Accra.
The annual pension indexation was made in consultation with the National Pensions Regulatory Authority (NPRA) and is in line with Section 80 of the National Pensions Act 2008 (Act 766).
As a result of the upward adjustment, the Trust projects that it will spend approximately GH¢5billion on pension benefits in 2023. Last year, SSNIT spent over GH¢4billion in benefit payments to approximately 234,000 pensioners on its pension payroll.
Of the amount to be spent this year, GH¢4.3billion is for pension payments while the remaining GH¢700million will cater for other benefits payments – such as invalidity pension, survivor’s lump-sum and emigration benefit.
Pension indexation is a policy that allows for the upward review of pensions in order to preserve purchasing power for pensioners. This is achieved 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.
According to SSNIT, all pensioners on its pension payroll as of December 31, 2022 will have their monthly pension increased by a Fixed Rate of 19 percent with an additional redistributed flat amount of GH¢73.58.
The redistribution is a mechanism applied to the indexation rate to cushion low-earning pensioners in conformity with the solidarity principle of social security.
The SSNIT scheme, like any other defined benefit arrangement, pays pensions that mirror the earned salaries on which contributions were paid. As a result, the effective increase in pensions will range from 19.1 percent for the highest-earning pensioner to 43.53 percent for the lowest-earning pensioner.
“Accordingly, the highest-earning pensioner as at 31st December 2022 will receive GH¢169,725.89 per month in 2023. The lowest-earning pensioner as at 31st December 2022 will have his/her monthly pension increased from GH¢300 to GH¢430.58 in 2023,” SSNIT further explained.
In addition, the scheme’s minimum pension for all new pensioners effective January 2023 will be GH¢430.58. This means that pensioners whose computed monthly pensions fall below GH¢430.58 will be placed on this minimum.
The pension a member enjoys under the 1st Tier scheme or SSNIT is dependent on the basic salary on which contributions were made and the number of months one contributed to the scheme.
Insurable earnings
In addition to increasing monthly pensions, SSNIT also increased the maximum insurable earnings for 2023 to GH¢42,000 from GH¢35,000 – effective from January 1, 2023.
Accordingly, the minimum insurable earning has also been increased from GH¢365.33 to GH¢401.76, following the raise in National Daily Minimum Wage. The scheme urged employers and members of the insurance scheme to comply with the new changes and ensure the right contributions, reiterating that the maximum and minimum contributions payable to it will be GH¢5,670 and GH¢54.24 respectively.
