Since 1992, the compulsory retirement age in Ghana has been pegged at 60. At the time, the average life expectancy was 57.4 years. 30 years down the line, life expectancy has increased to 64.4 years and the compulsory retirement age is still the same although other aspects of the country’s retirement and pensions policy have been reviewed.
Now, some stakeholders are calling for urgent discussions and considerations for an immediate review to sustain the country’s pension scheme.
“After 75 years, we’ll continue to pay you until the good Lord calls you home. So in theory, SSNIT can be paying till you are 101 years. The liability that SSNIT takes on can increase enormously as long as people are living longer,” said the Director-General of the Social Security and National Insurance Trust (SSNIT), John Ofori-Tenkorang at an open forum in Accra last month.
Increased retirement age means more contributions
With 1.6 million contributors and over 226,000 people on SSNIT’s retirees’ payroll, Ofori-Tenkorang says increasing the retirement age to 65 will help the Trust rake in more contributions to easily meet its payment obligations to retirees.
“People are becoming health conscious and taking care of themselves and people are living longer… So the question then becomes, should we let people contribute a little bit more by gradually shifting the retirement age,” he said.
In 2020, total pension contributions accrued to SSNIT was GH¢4.17bn ($610m) and it used about GH¢1.8bn ($281m) of that for lump-sum payments, old age payment and invalid pensioners payments.
Presently, the highest pensioner receives about GH¢ 129,979 ($20,300) monthly and the least pensioner is paid is GH¢ 300 ($46) per month.
While SSNIT celebrates a year-on-year increase in payments to pensioners, it is concerned that the Trust could be pushed into a tight corner with the payment of pensions to people some as old as 100 years. Reviewing the statutory retirement age in Ghana will require parliamentary action but very little has been done in that regard.
While vetting President Akufo-Addo’s nominee for Employment and Labour Relations minister in February 2021, the Member of Parliament for Bawku Central, Mahama Ayariga insisted on the need to increase the statutory retirement age to 65.
“Many of them live an additional twenty years or more and become a burden on the pension scheme which has to support them in retirement when they could actually work,” he said during the vetting, promising to initiate a bill to cause the change, but that has not been done yet.
Across the continent…
Many countries in Africa including Cameroon, South Africa and Nigeria maintain a statutory retirement age of 60 although some are also considering an increase. In Nigeria for instance, plans have been initiated to increase the retirement age of teachers and doctors from 60 to 65.
Austin Gammey, a labour analyst based in Accra tells The Africa Report that increasing the retirement age to 65 would worsen the unemployment situation in the country.
He argues that having “older people keeping their jobs is imprudent.” “I 100% disagree with the proposal…There are more jobless people in this country and people must retire early, so others can fill into the space,” he said.
As the debate rages on, it is becoming commonplace for retirees to be granted five-year extensions to continue in their old roles, a good case for persons calling for a review of the current retirement policy, but until a national dialogue is had on the issue, the 60-year retirement age policy and the sustainability of Ghana’s pensions scheme will stay an interesting puzzle.
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