The Social Security and National Insurance Trust (SSNIT) is a statutory public Trust charged under the National Pensions Act 2008 Act 766 with the administration of Ghana’s Basic National Social Security Pension Scheme and to cater for the first tier of the contributory three-tier scheme. The Trust is currently the largest non-bank financial institution in the country.
The primary responsibility is to replace part of lost income of Ghanaian workers or their dependants due to Old Age, Invalidity, or loss of life.
The Pension Scheme as administered by SSNIT has a registered membership of approximately 1.2 million with over 140,000 pensioners who regularly receive their monthly pensions from SSNIT. The annual absolute growth of pensioners is over 7,000.
The Trust was established in 1972 under NRCD 127 to administer the National Social Security Scheme. Prior to 1972, the Scheme was administered jointly by the then Department of Pensions and the State Insurance Corporation. Until 1991, the Trust administered a Provident Fund Scheme, and this was converted into a social insurance pension scheme which was reformed in January 2010 by an Act of Parliament, Act 766. The Act was however enacted on December 12, 2008 to replace the previous-Cap 30 and SSNIT Pension Schemes.
Act 766 makes provision for a contributory 3-Tier Pension Scheme; the establishment of a National Pensions Regulatory Authority (NPRA) to oversee the administration and management of registered pension schemes and trustees of registered schemes. Under the Act, Social Security and National Insurance Trust is to manage the basic National Social Security Scheme referred to as the 1st Tier.
The other Tiers of the National Pension Scheme are:
- Tier 2 - A mandatory fully-funded and privately managed occupational scheme.
- Tier 3 - A voluntary fully-funded and privately managed provident Fund and Personal pension Plan.
THE CORE FUNCTIONS OF SSNIT
- Register employers and workers
- Collect contributions
- Manage records on members
- Invest the funds of the Scheme
- Process and pay benefits to eligible members and nominated dependants.
HOW SSNIT OPERATES
SSNIT has a decentralized operational system made up of the Area, Branch, and Day Offices. An Operations Co-ordinator at the Head Office co-ordinates all operational activities and reports to the General Manager, Operations. There are eight (8) Area Offices, fifty (50) Branches and eighteen (18) Day Offices spread throughout the country.
The Branch activities include:
- Registration of employers and employees
- Collection and management of data on employers and employees
- Inspection of establishments and collection of contribution
- Distribution of contributors statement of accounts
- Assembling, processing and, vetting of claim documents as well as payment of benefits
- Processing Student Loan Repayment
- Public Education on SSNIT Operations
The Area Offices which exercise supervision over the Branches, carry out the following activities:
- Co-ordinate operational activities between the Branches and Head Office Operations Coordinator
- Institute legal action against defaulting employers
- Collate accounting returns and reports from the Branches under them.
- Public Education on SSNIT Operations
OPERATIONS CO-ORDINATOR RESPONSIBILITIES
- To provide input into the formulation of policies relevant for operations and assists to implement them.
- To assist in the preparation of divisional action plans.
- To assist in developing and implementing service designs which will satisfy customers. Examples are:
Monitors compliance with the Social Security Law by employers and employees.
- Evaluate and analyse reports from the various sections of the Operations Division and makes appropriate recommendations
- Collects, collates and analyses periodic Operations Reports for the Board.
THE BASIC NATIONAL PENSION SCHEME (TIER-1)
It is a Social Insurance Scheme under which members contribute during their working life and receive monthly Pension in the event of Old age, Invalidity; or in case of Death, the members’ dependants receive a Survivor’s Lumpsum Benefit.
Contributions and Other Vital Features
- The worker contributes 5.5% of monthly basic salary.
- The employer contributes 13% of worker’s monthly basic salary.
- The minimum contribution shall be 18.5% of the approved monthly equivalent of the national minimum daily wage.
- 2.5% is transferred to the National Health Insurance Fund for provision of medical insurance.
- 5% is transferred to Tier 2.
- SSNIT effectively withholds 11% for the administration of Tier 1.
- The self-employed members contribute 18.5% of their declared income.
- The maximum salary on which contribution would be assessed will be determined by the Trust periodically. This is to check the practice where some high income earners increase their salaries 3 years prior to retirement to the detriment of the scheme.
- The minimum contribution period shall be 180 months (15 years) in aggregate. This minimum contribution period will come into effect in 2015.
- The new minimum age at which a person may join the Basic National Pension Scheme is 15 years and the maximum is 45 years.
- The 12-year annuity guarantee period under the old scheme has been increased to 15 years.
- A worker who is entitled to retirement benefits under the pension scheme in existence before the commencement of this Act and is aged 55 or above is exempt from the scheme unless he/she opted to join.
- The accumulated contribution over the working life of the employee is expected to fund about a third of the projected future pension payments to the employee.
Pensions are paid monthly to qualified members.
The Pension benefits are earnings related and based on a formula prescribed in the law governing the scheme.
Other factors which affect the level of benefits are the age at which members apply for old age pension and also how long a member contributes to the Scheme.
- The Pension paid will fall between 37.5% and 60% of the average of the three best years’ salary depending on how long he/she contributed to the scheme at age 60.
- Those unable to contribute up to the minimum 180 months (15 years), receive a return of their contributions accumulated at a prescribed interest rate.
- A member can opt for early retirement between ages 55 and 59 and receive a reduced pension.
- Pensions are reviewed annually based on the changes in the average wage of contributing members and other economic indicators.
- Pensioners of the Scheme made up of those on old age and invalidity pension, receive monthly benefits through their bank accounts.