Parliament passes Pension Reforms Bill

Backpage, Oct 30, 2008
Story: Emmanuel Adu-Gyamerah
GHANAIAN workers can now heave a sigh of relief following the passage of the Pension Reforms Bill by Parliament yesterday to offer workers a better pension package.
When given Presidential assent, the bill will introduce a contributory three-tier pension scheme and establish a National Pensions Regulatory Authority (NPRA) to oversee the administration and management of registered pension schemes and the trustees of registered pension schemes.
It will also establish a Social Security and National Insurance Trust (SSNIT) to manage the basic national social security scheme to cater for the first tier of the contributory three-tier scheme, in addition to the establishment of the second compulsory tier and the third voluntary tier pension schemes.
In 1950, the Pension Ordinance Number 42 established a pension scheme for public servants in the Gold Coast which later became known as the CAP 30 scheme.
Later, in 1965, the Social Security Act (Act 279) was enacted to create a contributory Social Security Fund for the payment of supernnuation, invalidity, survivors and other related pension benefits for workers.
In 1972, however, the Social Security Decree (NRCD 127) repealed Act 279 and established the Social Security and National Insurance Trust (SSNIT) to administer a social security fund for the country.
Ghana has, thus, been operating two major pension schemes — the CAP 30 and SSNIT — since 1965.
The inequalities between these two schemes have become pronounced over the years and led to agitation and protests by some public sector workers on the SSNIT scheme who demanded to be placed on the CAP 30 scheme which is considered more favourable because of the payment of a lump sum.
It was because of this that the Presidential Commission on Pensions, which was chaired by Mr T.A. Bediako, was constituted by President J.A. Kufuor in July 2004 to make appropriate recommendations for a sustainable pension scheme that will ensure retirement income security for workers, with special reference to the public sector.
When the three-tier pension scheme is finally established, an employer of an establishment shall deduct from the salary of every worker in the establishment immediately after the end of the month a worker’s contribution of an amount equal to five and a half per cent of the worker’s salary.
The employer will then pay an amount equal to 13 per cent of the worker’s salary during the month.
The bill, which was laid before Parliament on June 27, 2008, was referred to the Finance Committee for consideration and report before passing through the various stages to end its full journey in Parliament yesterday.
The Minister of State at the Ministry of Finance and Economic Planning, Dr Anthony Akoto Osei, moved for the Third Reading of the bill and he was seconded by the Chairman of the Finance Committee, Nii Adu Daku Mante.