The Social Security and National Insurance Trusts (SSNIT) has assured Ghanaians, particularly contributors and pensioners, that its reserve will not hit zero as projected by the International Labour Organisation (ILO).
SSNIT described the report released by ILO as only assumptions and projections and said that the trust has enough in its reserve.
The International Labour Organisation (ILO) has projected a complete depletion of SSNIT’s reserve by 2036.
This was revealed in an actuarial valuation study of the viability of the viability of the Social Security and National Insurance Trusts (SSNIT).
According to the ILO, total income, including contributions, investment income, and other income, will no longer be sufficient to pay for annual expenditures, including benefit payments to pensioners, by 2029.
But reacting Chief Actuary, Mr. Poku, said they put on several measures aimed at making the trust more effective and functional.
Addressing a press briefing on Monday, April 29, 2024, he declared that SSNIT is not on the verge of collapse, as some have reported since the report was released.
He referenced similar studies conducted in 2011 and 2014 that made the same predictions, and yet the scheme has survived all these years without any sign of collapse or its reserve hitting zero.
He said the valuation exercise used assumptions and projections on both the scheme assets and liabilities and made recommendations to improve the sustainability of the scheme.
Mr. Poku said that just like it was predicted that SSNIT would collapse in 2019, it has survived and is working in 2024 and will continue to work and pay pensioners beyond 2036.
He said that per the law that establishes SSNIT, Act 766, SSNIT is enjoined to obtain an actuary valuation report every three years from external actuaries to produce a report on their performance.
He stressed that highlights from previous external valuation reports on sustainability are similar to those in the 2020 report.
“The 2011 valuation projected that if contribution rates were not increased in the future, the annual expenditure on benefits and administration expenses would exceed the income from contributions and the fund’s assets from 2019 onwards (this has nothappened). The projection ran up to 2070.The SSNIT Reserve was projected to be exhausted by 2031 (unless the contribution rate was increased to 16% or the benefit structure changed).
The 2014 valuation report projected annual expenditures to exceed total income (contributions, investment income, andother income) in 2035. The reserve starts to decrease, and during the year 2042,The reserve drops to zero. The 2017 valuation report projected that total income contributions, investment income, and other income will no longer be sufficient to pay for annual expenditures in 2032. The reserve starts to decrease. During the year 2038, thereserve drops to zero when no measure is taken.
He said SSNIT has also taken measures to address some issues for the long term sustainability of the scheme, which includes the deactivation of “ghost” pensionersfrom the pension payroll, which saved the scheme GH¢ 519 million as of March 2024.
The expansion of coverage through the Self-Employed Enrollment Drive (SEED), he said, has increased the number of contributors who are self-employed from 14,000 to 80,000 since it was introduced.
Mr. Joseph Poku added that the scheme has invested in technology to reduce the cost of running the scheme and improve operational efficiency, as well as the introduction of policies to guard against abuse of the scheme, leading to undue benefits payout, such as: disabling members aged 60 and above to contribute to the scheme; annual verification of the status of invalid pensioners (Invalidity Pensioner Certificate); discontinuation of the adjustment of the three best years’ average salaries before age 55; and discontinuation of the increase in the minimum pension.
He also revealed that SSNIT submitted a proposal of amendments to Act 766 (subjectto a review process) has been sent to theBoard.
“Some changes have been proposed forsustainability of the scheme, including:Introduction of interest, in addition topenalty on delayed payment of contributions. Extension of the qualifying period for pension from 15 years back to 20 years
“The main purpose of the valuation is to find out whether the financing of SSNIT is on course over the long term, not to exactly forecast numerical values. Due to the long-term nature of assumptions, absolute figuresinclude a high degree of uncertainty.
Therefore, results should be interpreted carefully, and future actuarial reviews should be undertaken on a regular basis to revise actuarial assumptions in light of the actual experience of the scheme.”
“The scheme will be able to pay pensions and meet its financial obligations beyond 2036. The findings in the 2020 external actuarial valuation report, which are not different from the findings in the previous reports, must not be taken in isolation. The Trust is committed to taking measures across the board to ensuresustainability of the scheme through the implementation of measures to improve returns, be more cost-effective, and effectively engage the government in its indebtedness.”
By: Rainbowradioonline.com/Ghana
