NEW PENSION LAWS

An investigative study into the new pension laws of ghana versus those of the United Kingdom- Lessons for successful implementation

An investigative study into the new pension laws of ghana versus those of the United Kingdom- Lessons for successful implementation

Introduction

The provision of State pension in Ghana is an issue that has recently attracted major concerns from politicians, social groups and individuals. The present day State pension scheme in Ghana, otherwise called the Social Security and National Insurance Trust (SSNIT) Pension Scheme has been the subject of bitter criticisms from identifiable bodies in Ghana such as the Trades Union Congress (TUC), Ghana National Association of Teachers (GNAT), Civil Servants Association, Ghana Registered Nurses Association and the Private Sector Workers. In fact, in some instances, some of these identifiable bodies have threatened to break away from the State pension scheme and set up their own respective pension schemes. Other bodies have called for a reform of the current scheme to make it more attractive, while others have called for the privatization of the State pension scheme.

Issues of Public Concern

The major issues of concern are the adequacy of benefits currently provided by the scheme and the qualities of the services provided by SSNIT, the body established by law to administer the State pension scheme in Ghana. The current levels of benefits are perceived to be inadequate. Also, the current pension arrangements are seen as not being generous enough.

Some members of the scheme have questioned the qualities of the services provided by SSNIT, and there seems to be considerable lack of confidence in the efficiency of SSNIT in maintaining members' records of contributions to the scheme. Another issue of concern is the scope of coverage of the working population by the State pension scheme. Over ninety percent of the members of the scheme are formal sector employees, with the rest of the members being self-employed persons in the informal sector of the economy.

A similar pattern is obtained with regards to the coverage of the working population by the private pension schemes (Private Communication). However, the informal sector employs about ninety percent of the working population of Ghana (Adjei, 1999). This means that a large number of workers in Ghana are currently not making any provisions for guaranteed incomes in retirement. This poses potential economic and social problems in the near future for a young population like that of Ghana.

Educational programs undertaken by the Social Security and National Insurance Trust to attract more informal sector employees into the State pension scheme have not yielded any significant results. Similarly, attempts by private pension providers to get more self-employed workers into their pension schemes have also not yielded the desired results (Private Communication).

The inability of pension providers to attract more informal sector workers into the State and private pension schemes is mainly due to the fact that most of them are self-employed with generally low and fluctuating incomes. They will therefore have to be motivated enough to wish to set aside ...