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We’re not cheating pensioners – SSNIT

The Social Security and National Insurance Trust (SSNIT), has refuted claims it is perpetuating illegalities in its handling of pensions, as alleged by the Health Services Workers’ Union.

These allegations had to do with annuities imposed on the payment of lump sums and the computation of average annual salaries for pensions.

In a Finder Newspaper report, the Union said SSNIT has been cheating trustees, and held that the Trust had imposed annuity on the payment of lump sum, which reduces the lump sum for 12 years by 41.9%, in contrast with the PNDC Law 247 of 1991  regulating pensions.

The union compared this to the CAP 30, police pension, among others, which are paid gratuity without any annuity deductions.

But responding to the concerns and allegations, the acting Head of Corporate Affairs at SSNIT, Victoria Abaidoo, likened the pension contributions to an investment, which could accrue penalties if withdrawn prematurely.

The PNDC law 247’s Section 36 deals with the formula for computation of pensions and it says in that, “for the purpose of computing pension benefits a member may be paid a full or a reduced pension: Provided that such a member may exercise the option for a part lump sum payment of twenty-five per centum of his pension and a reduced pension payment.

Mrs. Baidoo explained that, per the law, retirees have an option to take 25 percent of the total benefit they are supposed to have for a period of 12 years at a go, and when you opt for the 25 percent lump sum, “what it means is that the payment that you are supposed to make in 12 years, you want to take it today.”

“…Like any financial transaction, if you want to take your money or your investment when it is not mature, it is discounted. So the annuity factor there is indicating that we are discounting the amount of money that you are supposed to get in 12 years and giving you the present value today.”

She also noted that the comparison of SSNIT to CAP 30 was a non-starter as that was not based on contributions.

“It is the government’s way of paying off people who have worked in the Civil Service as Senior officers, but when it comes to SSNIT,  it is the contribution you put in that determines how much you are going to get,” Mrs. Abaidoo said.

Calculating annual salary of best three years

The other bone of contention from the Health Services Workers’ Union has to do with the computation of the annual salary of the last three years of a worker in situations a worker retires before the last month of the year.

Section two of the PNDC law 247 says: “the minimum pension payment shall be based on fifty per centum of the average annual salary for the three best years of a member during his working life.”

The union noted as an example that, a member who retires on April 1, 2017, will, for example, have nine months’ salaries counted in 2014, four years preceding retirement, seemingly to his detriment as he will be cheated by SSNIT.

Mrs. Abaidoo, however, stands by this formula for calculating pensions, explaining that it would be impossible for the Trust to take contributions from unearned salaries.

“…When a contribution has come to SSNIT, we are looking at that salary that brought in the contribution to calculate your pension. So if your contribution has not come, how do we use an unknown salary to calculate your pension? So what happens here is, if the person actually retires in March… then they would have to go back to pick the number of months that will add up to the 12 months for us to get an annual salary to complete the pension.”

By: Delali Adogla-Bessa/citifmonline.com/Ghana