Frequently Asked Questions

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It is the new pension scheme established by the National Pensions Act, 2008 (Act 766) that replaces the previous SSNIT pension scheme and other parallel schemes

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This new scheme has a 3-Tier structure with private involvement in the management and an establishment of a regulatory body instead of the previous arrangement under PNDCL 247.

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The objective of the scheme is to:

 

 Provide pension benefits to ensure retirement income security for workers.

 

 To ensure that any worker receives retirement and related benefits as and when due.

 

Establish a uniform set of roles regulations and standards for the administration and payment of retirement and related benefits for workers in the public and private sector 

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This contributory 3-Tier pension schemes consists of:

1st-Tier ? A Mandatory basic National Social Security Scheme

 

2nd- Tier   - A mandatory fully funded and privately managed occupational pension scheme

 

3rd-Tier - A voluntary fully funded and privately managed provident fund and personal pension scheme.

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The total contribution from the employer and the employee under the new scheme is 18.5% and is distributed as follows:

 

New Scheme (Act 766)    Employer-13%

Employee-5.5%

Total =18.5%

 

Old SSNIT Scheme (PNDCL 247))-Employer - 12.5%)

 Employee - 5%

Total= 17.5%

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The 3-Tier Pension Scheme took effect from 1st January 2010.

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It is a non-contributory pension scheme instituted in 1950 under the Pensions Ordinance, No. 42 of Chapter 30 for civil servants in the service before 1972. 

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No! This is due to the non-contributory nature of the scheme and the increasing pressure on the consolidated funds from which the CAP 30 benefits are paid.

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All pension schemes in Ghana including that of the Security Services shall be unified under the 3-Tier Pension Scheme in compliance with the National Pensions Act, 2008 (Act 766) as amended.

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Eligible workers are those who are 15 years and above, and those who are less than 50 years as at Jan. 2010.

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Social Security contributions are based on 18.5% of approved monthly equivalent of the daily minimum wage.

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The maximum income level is determined periodically by SSNIT in consultation with NPRA. 

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Yes, it is compulsory for all formal sector workers to join the 1st and 2nd-Tier mandatory schemes. The 3rd- Tier is however voluntary. 

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 The contributions since 2010 are being lodged in a Temporary Pension Fund Account (TPFA) at the Bank of Ghana and are invested in Treasury Bills and the interest paid to the account of the contributors. Currently the audited funds are being transferred to registered schemes. 

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No. Such companies are paying their 2nd-tier contributions directly to the Custodian Banks of their  registered schemes.

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Occupational Pension Scheme is a pension scheme that is work-based, established under a trust which provides benefit based on a defined contribution formula in the form of a lump sum payable on termination of service, death or retirement, or in respect of persons covered under section 58 of Act 766 and other persons specified under the 2nd tier scheme.

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Such workers can participate in the  3-tier pension scheme by joining the occupational pension scheme ? all their contributions of 18.5% would be paid into the 2nd tier occupational pension scheme.

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5% of the total contribution of 18.5% goes into the occupational pension scheme. 

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Such people will receive 25% lump sum of their total accrued benefits and the remaining 75% will be used to buy an Annuity from an approved Insurance Company which will be paid to the person on monthly basis.

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One can join the Occupational Pension Scheme from 15years and above.

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The 2nd ?Tier is designed to pay lump sum and other related benefits to members of the scheme on retirement.

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A contributor can claim his/her 2nd -Tier benefits at retirement (ie 55years -60years). However a contributor can claim the benefits at age 50 if he/she is unemployed.

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No, that is illegal and is not permitted by Act 766.  The law however, allows a member to use that member?s benefit to secure a mortgage for the acquisition of a primary residence only.

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The contributions shall be remitted by the employer to the appropriate scheme within fourteen (14) days from the end of each month of the contribution.

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Provident Fund Scheme is a scheme, governed by a trust to which a contributor or contributor?s employer or both contribute to a pension scheme which provides benefits based on a defined contribution formula to provide for the payment of

 

a) Lump sum benefits to the members of the scheme when they reach the retirement age, or any other prescribed event occurs in relations to them or

 

b) In the case of members who die before reaching that age or before the occurrence of such an event, provides for the payment of those benefits to the personal representatives or beneficiaries of the estates of those members.

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The companies operating old Provident Fund Schemes must register the scheme with NPRA and modify existing rules and regulations of the scheme in compliance with the National Pensions Act 2008 (Act 766), the regulations and the guidelines issued by the Authority.

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Yes. 

 

a. The contributor gets 16.5% tax exemption on his/her income from which the contributions were made.

 

b. The interest of members will be protected by the Pensions Authority, overseeing to the administration and management of the schemes.

 

c. The rules and regulations of the scheme will conform to the Act which ensures that the sponsor has no undue influence in the management of the scheme and also ensure that the scheme funds/assets are separated from that of the trustees and the employer/sponsor.

 

d. The law also provides one-third representation of members on the Board of trustees managing the scheme. This provides an opportunity for the members of the scheme to have a say in the management of their contributions.

 

e. The fees charged by the services providers are also regulated to avoid arbitrary charges that may affect the scheme. 

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A Personal Pension Scheme is any scheme to which the contributor contributes personally to provide benefit based on a defined contribution formula in the form of pensions to the member or otherwise payable on death or retirement to their beneficiaries. 

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A Group Personal Pension Scheme is a pension scheme formed by individual persons with common identity/relationship who come together as a group and contribute into a pension scheme they have registered to provide a pension benefits and other benefits as may be described in their rules and regulations.

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The group/personal pension scheme is designed primarily for workers in the informal sector and the self-employed. 

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Yes; apart from participation in the 1st, 2nd, and 3rd tier provident fund (if available at the work place), the worker can also contribute to a personal pension scheme to enhance his/her retirement benefits.

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The rules and regulations of the scheme determines how the distribution should be done into the two accounts.

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