Explore Alternative Funding for Pension Schemes – Bawumia
Vice President Dr Mahamudu Bawumia has emphasised the need for stakeholders in the pension management industry to explore alternative sources of funding pension schemes without any entrenched positions.
He said successive governments would not have to resort to borrowing to pay pension benefits with its accompanying interest cost if this is done.
The Vice President also emphasised the need for prudent management of the country’s pension resources, saying “it is imperative to unify the fragmented pension schemes to ensure fairness, equity and sustainable management of pensions.”
He said to prevent any future legal tussle and disruption of the operations of pension management in the country, and there is a need to bring finality to the long-standing conversations on unifying pension schemes to resolve the pension benefit disparities in the pension administration.
Vice President Bawumia said this at a high-level stakeholders meeting on the unification of the pension schemes in the public sector, in Accra.
The meeting organised by the Ministry of Employment and Labour Relations, brought together experts in pension management, to brainstorm on the best strategy to unify the various pension schemes in the country to ensure equity and sustainability.
The participants were drawn from the Trades Union Congress, National Labour Commission, Public Services Commission and Fair Wages and Salary Commission.
The rest included; representatives from the pension schemes, Office of the President, Majority and Minority Leaders of Parliament, National Regulatory Authority, the Cabinet Economic Committee, Social Security and National Insurance Trust and the Controller and Accountant General’s Department.
The National Pensions Act, Act 766 of 2008 as amended by Act 883 of 2014 says all institutions operating parallel pension schemes in the public sector are supposed to be unified under the three-tier pension scheme.
However, it has been observed that new employees in the public sector instead joined the non-contributory scheme like CAP 30, thereby making funding unsustainable and burdensome on the government budget.
Vice President Bawumia said in 2016, the estimated amount paid in pensions to those under the contributory scheme (Social, Security and National Insurance Trust) was GH¢1.75 billion, while the average annual benefit per member was GH¢10,041. 00 with a monthly pension benefit of GH¢837.00
For those under the non-contributory scheme (CAP 30), it was GH¢900 million for 77,877 pensioners with an average annual gain of GH¢11,560.00 and a monthly pension benefit of GH¢963.00.