The National Pensioners Association has accepted the 2024 indexation announced by the Social Security and National Insurance Trust (SSNIT).
According to its General Secretary, Stephen Boakye, the association appreciates the 15% announced.
The Social Security and National Insurance Trust (SSNIT), in consultation with the National Pensions Regulatory Authority (NPRA) and in line with Section 80 of the National Pensions Act, 2008 (Act 766), has indexed monthly pensions upwards by 15% for the year 2024.
According to SSNIT, the investment shall be implemented as follows: all pensioners on the SSNIT Pension Payroll as of December 31, 2023, will have their monthly pension increased by a fixed rate of 10% plus a redistributed flat amount of GHÇ79.10.
Redistribution is a mechanism applied to the indexation rate to cushion low-earning pensioners in conformity with the solidarity principle of social security.
Reacting to this, Samuel Boakye said that although the figure was a reduction from the 25% they got in 2023, they have accepted the 15%.
He said the circumstances under which they got the 20% in 2023 were not the same as this year; hence, the 15% was good. He told journalists that they expected 10% following the explanations and engagements they held with SSNIT.
Director General of SSNIT, Dr. John Ofori-Tenkorang, in explaining why SSNIT announced a 15% increase from the 25% announced last year, said, “Our mandate is to ensure that we people retire, their purchasing power is maintained, and they are not worse off because of inflation”.
The director highlighted the importance of timely pension payments and long-term sustainability in determining the indexation of pension schemes, stating that they cannot be deferred, making the ability to pay a key consideration in announcing the indexation.
SSNIT is guided by the principle that its indexation will sustain it without bastardizing the scheme in the medium and long term. As inflation rates reduce, the indexation rate also decreases. If the indexation went beyond 15% this year, SSNIT would have suffered financial implications, as he confirmed.
According to Mr. Boakye, “the 25% announced in 2023 was unprecedented.” We have not seen such an indexation since the Association’s inception. As a result, we should not expect the same or higher figure every year. We have been engaged and informed about the reasons for the 15%. They gave good reasons, so we as an Association expected 10%, but we received 15%, which is encouraging.
We were not optimistic about the new figure. We expected 10% at most, so if we got more than that, that’s great news. Some members, we know, expected more. Some would have been upset even if they had given us 20%. The most important thing is that they pay on time, so it’s better to have a figure where SSNIT can pay on time than a figure where payment will be delayed. We’ve seen something similar happen before, and we don’t want it to happen again.
2024 Indexation Rate
The SSNIT Scheme, like any other defined benefit scheme, pays pensions which mirror the earned salaries on which contributions were paid.
The effective increase in pensions would therefore range from 10.05% for the highest-earning pensioner to 36.37% for the lowest-earning pensioner.
Accordingly, the highest-earning pensioner as at 31st December 2023 will receive GH¢ 186,777.58 per month in 2024.
The lowest-earning pensioner as at 31st December 2023 will have the monthly pension increased from GH¢ 300 to GH¢ 409.10 in 2024.
The average monthly pension will increase from GH¢ 1,527.29 in 2023 to GH¢ 1,756.38 in 2024.
The 15% indexation rate will result in an additional pension expenditure of GH¢ 697.64 million. The total expenditure in 2024 for pensioners on the Pension Payroll as at 31st December 2023 will be GH¢ 5,387.72 million. The GH¢ 5,387.72 million excludes pension cost for new awards i.e. the benefits to be paid to retirees who would be added to the pension payroll in 2024.
The total benefit expenditure is projected to increase from GH¢ 5,445.91 million in 2023 to GH¢ 7,023.43 million in 2024.
Pensioners are paid on the third Thursday of every month.
By: Rashid Obodai Provenvcal/Rainbowradioonline.com/Ghana