Location:#8 Otu Kofi Link Kuku Hill, Osu-Accra Postal: P.O. Box SR 413, Spintex Rd. Tema-Ghana Call: +233)302-784177 / 784178 Fax: +233)302-784180 Email: firstname.lastname@example.org
The new Pension Act provides for pension in the country through the introduction
of a contributory three-tier pension scheme, the establishment of a National Pensions
Regulatory Authority to oversee the administration and management of registered pension
schemes and Trustees of registered schemes as well as the re-establishment of a Social
Security and National Insurance Trust to provide for related matters.
The new and improved 3-tier concept of the reform is meant to provide more options
for people to plan for their retirement. The objectives of the Pension Act are to
provide pension benefits to ensure retirement income security for all categories
of workers in the country. It is also to ensure that workers receive retirement
and related benefits as and when they are due, and to establish a uniform set of
rules, regulations and standards for the administration and payment of retirement
benefits for workers, both in the public and private companies and institutions.
1st tier: A mandatory occupational scheme to be run by a restructured SSNIT. Contributions
will be 13.5% of gross salary. Retirement benefits will be only in the form of monthly
income and death & invalidity benefits should a contributor die before retirement.
SSNIT will no longer pay the one-off lump sum benefit at retirement.
It is a Defined Benefit (DB) scheme, which means the level of pension benefits would
depend on quantum of contribution, also related to the level of income during the
active working years, and the number of years one contributed for.
2nd tier: Also a mandatory occupational scheme to be run by approved Trustees licenced
by the regulatory body but managed by private fund managers. Contributions to the
scheme would be 5% of the employee’s gross salary. Benefits would be lump sum payments
which are expected to be higher than presently exists under SSNIT and CAP 30. Being
a Defined Contribution (DC) scheme, level of benefits would depend on both level
of contribution and returns on investments. Proceeds could be used to purchase annuities
to enhance the monthly benefits or to fulfill any other financial objectives set
by the individual.
3rd tier: A voluntary fully funded provident fund and personal pension scheme managed
by private fund managers. An optional scheme for everyone to either top-up their
pensions or to use as a sole pension provision. The guide to contributions would
conform to the tax regulations on the Long Term Savings Act now repealed. The maximum
allowable tax relief of 35% on gross earnings would apply. Each contributor would
either be paid a lump sum or monthly pension depending on choice while on retirement
by the chosen private fund manager. It means that formal sector employees can only
top with 16.5% of gross salary, as 18.5% would already have been paid into 1st and
It is also a Defined Contributory (DC) scheme and therefore benefits would depend
on contributions and largely on investment returns. Benefits could be used to purchase
annuities or deployed for a financial objective.