The Trades Union Congress (TUC) has petitioned President Nana Addo Dankwa Akufo-Addo to intervene to ensure that pension lump sums paid to people retiring from this year are commensurate with their contributions over the years.
The TUC said the President's intervention had become necessary after data and analysis by the union showed that the amount 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.
They 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).
Act 766 replaced the PNDC Law 247 in 2010 as part of a new pensions reform exercise that aimed at improving the lump-sums and monthly pensions paid to retirees.
“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 to the President.
It was signed by the Secretary General of the TUC, Dr. Yaw Baah.
Land For sale
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 petition said.
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 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.”
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 letter 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,” it said.
The labour union said it was compelled, once again to write, requesting for the President’s intervention in correcting what the union considered as “injustice and unfairness” in the implementation the National Pensions Act, 2008 (Act 766).
It said the union strongly believed that the intervention of the President would be timely and appropriate to avert an imminent labour unrest.
Exclusion of security agencies
It added that the unions had read in the media about Cabinet’s approval for the exclusion of security agencies from unification of pensions under the Three-Tier Pension Scheme as provided for in Act 766.
“Such a policy will undermine the solidarity principle that serves as a bedrock for the Three-Tier Pension Scheme, particularly, the First-Tier SSNIT Scheme. The TUC cannot support such a policy.
“We urge you, Mr. President, to review the policy,” the letter said, adding that the union was counting on the leadership of the President in those matters.
Regarding government indebtedness to SSNIT, the union said it was one of the factors that had compelled SSNIT to pay low lump-sums as a way of protecting the scheme in order to have adequate funds to pay monthly pensions to retirees on SSNIT payroll under the first-tier scheme.”
The TUC therefore wants the President’s intervention in rectifying the issue.
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