The Industrial and Commercial Workers Union (ICU) is advocating support for the Social Security and National Insurance Trust (SSNIT) to afford it pay meaningful and acceptable pension benefits to contributors.
Reacting to concerns from the Trades Union Congress (TUC) over the implementation of the three-tier pension system, General Secretary of the ICU, Mr Solomon Kotei told Business Finder, “government should support SSNIT to enhance its operations and beef up whatever payments it is making to contributors.”
“The internal regulations of SSNIT must be improved to enable them function more effectively,” Mr Kotei stated.
Workers, he noted were unhappy with SSNIT because “when they retire and see the benefits for the next 12 years, if they remain alive to see another review, it’s paltry, very insignificant, makes life unbearable.”
It will be recalled that the TUC in a letter dated August 24, 2020 requested President Nana Akufo-Addo to intervene and correct what it called the “injustice and unfairness in the implementation of the three-tier pension system.”
SSNIT should manage Tier 2 too
The ICU Boss proposed that after seeing to the second tier pension is taken from private fund managers, ”who are just milking contributors,” and given to SSNIT.
“SSNIT should be to manage the 18.5 per cent and I can tell you SSNIT can do wonders,” Mr Kotei said.
SSNIT must tell its story fully
The ICU charged SSNIT to tell its story fully, provide the general public and contributors details successes chalked. “It is not all investments that turn out profitable so all cannot be lost on the Trust.”
Lump-sum benefits of 2020 retirees unfair-TUC
The TUC explained that under the Provisional National Defense Council (PNDC) Law 247, retirees received lump-sum payment equal to 25 percent of their total pension benefit.
When the three-tier pension scheme was introduced in 2010 part of the contribution to SSNIT was hived off and paid into privately managed second-tier pension schemes.
The Congress explained that contribution to second-tier schemes (including returns from investment of the fund) was to replace the 25 percent lump-sum paid by SSNIT.
“As part of the arrangement, SSNIT was required to pay what is known as Past Credit which represents part of the contributions retirees made to the SSNIT scheme (First-tier scheme) before the commencement of the implementation of the three-tier scheme in January, 2010,” the letter said.
According to the TUC, “from January 2020, a beneficiary’s lump-sum was being computed as: 25 percent Lump-sum=Past Credit from SSNIT+ Contributions to Second Tier Schemes (including returns on investment). A significant number of our members who retired in 2020 have already received their lump-sum based on this formula.”
The TUC maintained that its analysis, based on the data it had gathered from retirees, showed that their lump-sum benefits were lower when compared to what they would have received under PNDC Law 247.
“This is due, partly, to low Past Credit being paid by SSNIT based on a formula that is not clear to us,” TUC’s letter to the President said.
Govt’s indebtedness to SSNIT
Another concern had to do with government’s arrears in respect of social security contributions for public sector workers.
The TUC believed that the huge government indebtedness to SSNIT is one of the factors that have compelled SSNIT to pay low.