…Mahama’s “All Covered” plan for retirement security
By Korsi DZOKOTO
Pension systems play a vital role in ensuring financial security and dignity for individuals after retirement, offering long-term savings and income for workers when they are no longer in active employment.
In Ghana, while the current pension system has provided a basic framework for retirement security, it faces significant challenges—ranging from inefficiencies in management to the exclusion of large segments of the population, particularly those in the informal sector.
In response, John D. Mahama’s 2024 manifesto outlines a visionary “All Covered” plan to enhance the security, inclusiveness, and sustainability of Ghana’s pension system. The plan aims to deliver a dignified retirement for all citizens, focusing on comprehensive reforms and targeted interventions.
Strengthening the Legislative and Regulatory Framework for Pensions
To build a pension system that serves the needs of all contributors, Mahama’s administration commits to reviewing and updating the legislative and regulatory framework for pensions.
This overhaul will address several key areas, starting with the need to support workers who lose their jobs unexpectedly due to natural disasters. Under the NDC’s plan, these workers will have access to their pension funds to tide them over while they search for new job opportunities. This provision will provide a vital safety net, especially for individuals in vulnerable sectors such as agriculture and small-scale businesses, where natural disasters can wipe out livelihoods.
Another innovative intervention is the creation of a Mortgage Assistance Fund. Workers who have been contributing to their Tier 2 pensions for at least 15 years will be able to use their pension contributions as collateral to access mortgage loans.
This will make homeownership more accessible to middle-income Ghanaians, allowing them to invest in property while securing their future through long-term retirement savings. By linking pensions to mortgage access, the NDC is creating an opportunity for workers to benefit from their contributions while still securing their retirement income.
Additionally, Mahama’s plan includes a provision to allow for credit lump-sum payments to workers from age 50. This will provide flexibility to individuals who may need access to a portion of their retirement savings before the standard retirement age, giving them the financial freedom to meet personal or business needs while ensuring they still have sufficient funds for retirement.
Improving the efficiency of the Social Security and National Insurance Trust (SSNIT) is another key priority. Mahama’s administration plans to enhance the operational and financial efficiency of SSNIT, ensuring that contributors receive prompt and reliable services.
By streamlining operations, eliminating bureaucratic bottlenecks, and adopting modern technologies, SSNIT will be better positioned to manage funds and provide superior service to contributors and retirees.
Reforming SSNIT for Better Governance and Financial Management
At the core of the NDC’s pension reforms is a commitment to restructuring and strengthening the corporate governance of SSNIT. Over the years, SSNIT has faced criticism for inefficiencies and lapses in management, which have affected the timely distribution of benefits and the financial sustainability of the pension fund. Mahama’s administration will prioritize improving corporate governance, focusing on transparency, accountability, and sound financial management.
These reforms will ensure that SSNIT operates in the best interest of contributors, investing pension funds prudently and transparently. By enhancing governance structures, the NDC aims to restore public trust in the pension system and ensure that workers can rely on SSNIT to provide a financially secure and dignified retirement.
Reducing Old-Age Poverty Through Inclusive Pension Schemes
One of the most ambitious aspects of Mahama’s “All Covered” plan is the focus on reducing old-age poverty by encouraging Ghanaians across all income levels to invest in retirement. The NDC government plans to promote defined pension contributions, which offer greater certainty in retirement benefits. Defined pension plans ensure that retirees receive a fixed income based on their contributions and years of service, providing greater financial security in retirement.
Furthermore, the NDC is committed to making pension systems more inclusive, particularly for workers in the informal sector. A significant portion of Ghana’s workforce—such as commercial drivers, farmers, fishermen, traders, and artisans—operates in the informal sector, where traditional pension schemes are often inaccessible.
Mahama’s administration will implement the Mo-Ne-Yo Initiative, which will promote special pension schemes tailored to informal sector workers. This initiative will allow workers in occupations like Okada riders, small-scale miners, and market women to make regular pension contributions, securing their livelihoods in retirement.
By extending pension coverage to informal sector workers, the NDC is addressing a significant gap in Ghana’s social protection system. The initiative will not only reduce poverty among the elderly but also improve the financial resilience of informal sector workers throughout their working lives.
Investing Pension Funds for High Returns
Creating value for pension contributors is another key priority of the NDC’s “All Covered” plan. The next Mahama administration will invest pension contributions in development projects with high returns, ensuring that the funds grow over time and provide enhanced benefits for retirees.
By investing in sectors such as infrastructure, agriculture, and housing, the government will generate significant returns on pension funds while contributing to national development.
These investments will be guided by a prudent investment strategy that prioritizes both financial returns and social impact. The NDC government will work closely with SSNIT and other pension fund managers to identify high-return opportunities that align with Ghana’s development goals, ensuring that pension funds are used efficiently and effectively.
Enhancing Pension Distribution and Ensuring Stability
To ensure the long-term stability of Ghana’s pension system, Mahama’s manifesto emphasizes the need for efficient distribution of contributors’ funds. The NDC government will optimize the distribution of pension funds to listed pension firms, ensuring that contributors benefit from a stable and profitable pension system. This will involve working closely with private pension firms to enhance their operational efficiency and ensure that they provide competitive returns to contributors.
By improving the regulatory environment and promoting competition among pension firms, the NDC aims to create a more vibrant and stable pension market. This will ultimately benefit contributors, who will have access to a range of pension products that offer superior returns and financial security.
Conclusion: A Comprehensive Plan for Pension Security
John D. Mahama’s “All Covered” plan offers a bold and comprehensive vision for transforming Ghana’s pension system. By reforming SSNIT, extending coverage to informal sector workers, and promoting efficient investment of pension funds, the NDC aims to create a system that delivers dignified and financially secure retirement for all Ghanaians.
Through targeted interventions such as the Mortgage Assistance Fund, credit lump-sum payments, and the Mo-Ne-Yo Initiative, Mahama’s administration will enhance the inclusiveness, security, and sustainability of the pension system, ensuring that all citizens can look forward to a dignified retirement.
