Labour unions in the country have petitioned President Nana Addo Dankwa Akufo-Addo to ensure that pension lump-sums paid to people retiring from 2020 are consistent with their contributions over their years.
Led by the Trades Union Congress (TUC), the labour unions said the President’s intervention had become necessary after data and analysis showed that the number of lump-sums received by retirees under the National Pensions Act (2008), Act 766, was lower than the amount they would have received under the PNDC Law 247.
According to a report by the Daily Graphic, the TUC have blamed the smaller lump-sums received under the Act 766 to what they described as smaller past credits paid by the Social Security and National Insurance Trust (SSNIT).
“Data gathered by the union and an analysis of it showed another anomaly which was that the lump-sum benefits of those retiring in 2020 were low compared to what they would have received under PNDC Law 247,” the TUC said in the petition signed by the Secretary-General of the TUC, Dr Yaw Baah.
The petition also called on the President to revise a recently announced government policy that would exclude security services from the unification of pensions under the three-tier pension scheme, saying it defeated the principle of solidarity in the scheme.
“The TUC cannot support such a policy. We urge you, Mr President, to review the policy,” the TUC said in the petition.
The labour union also called for the intervention of President Akufo-Addo to redress the “huge government indebtedness to the Social Security and National Insurance Trust (SSNIT).”
Explaining their position on lump-sums, the TUC said that under the PNDC Law 247, retirees received “lump-sums that were equal to 25 per cent of their total pension benefits.”
It added that with the introduction of the Three-Tier Pension scheme in 2010, part of the contribution to SSNIT was hived off and paid into a privately managed second-tier scheme, with contributions to that scheme (including returns from an investment of the fund), replacing the 25 per cent lump-sum paid by SSNIT.
“As part of the arrangement, SSNIT was required to pay what is known as past credits, 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 TUC was quoted in the Daily Graphic report.
According to the union, from January 2020, a beneficiary’s lump-sum was being computed as 25 per cent lump-sum = Past Credit from SSNIT + contributions to Second-Tier schemes (including returns on investment).
The TUC maintained that a significant number of their members, who retired in 2020, had already received their lump-sums based on that formula, which it said was smaller when compared to the amount they would have received under the PNDC Law 247.
TUC’s petition attributed the reduction in the lump-sum to the low past credits being paid by SSNIT based on a formula “that is not clear to us.”
“The TUC has, on several occasions called for a stakeholder meeting to discuss our concerns but no such meeting has been convened.
“Retirees are receiving lump-sums that do not match their contributions to SSNIT,” the TUC said.