The International Labour Organisation (ILO) is projecting that Ghana’s Social Security and National Insurance Trust (SSNIT) reserves will be depleted by 2036.
Details
This was revealed in an actuarial valuation study of the Social Security and National Insurance Trusts (SSNIT) viability.
According to ILO, total income including contributions, investment income, and other income, will no longer be sufficient to pay for annual expenditures including benefit payments to pensioners by 2029.
What They’re Saying
“Starting in 2029, total income (contributions, investment income, and other income) is no longer sufficient to pay for annual expenditures.
“The reserve starts to decrease. During the year 2036, the reserve drops to zero” the research emphasised.
Digging Deeper
SSNIT will have to depend on reserves to meet the payment demand leading to the start of the depletion process. This is likely to continue till 2036 when the reserve will drop to zero.
The reserve ratio, which is the end-of-year reserve over the annual expenditures for the year, moves from 3.4 to 0 between 2021 to 2036.
This means the scheme can no longer pay pension benefits if there are no contributions, no investment income, and no other income.
Between The Lines
Details of the valuation report indicated that the critical cause of this development is the delay in payment by the government.
By The Numbers
Of the GHC 9.35 billion total indebtedness to SSNIT as of December 31, 2021, 73.7% translating to GHC 6.9 billion was due to late payments of contributions by the government.
This leads to a 1.3% drop in expected returns on investment made by SSNIT, the report emphasised.
According to the study, “Past experience suggests that, by not paying on time and not paying the interest income on delayed contributions, the Government shifts an important part of the cost to the private sector”.
Source: Joy News
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