The Social Security and National Insurance Trust (SSNIT) has responded to the study by the International Labour Organization (ILO) projecting a complete depletion of SSNIT’s reserve by 2036, calling it a prediction.
Joseph Poku, SSNIT’s Chief Actuary, stated that the study is conducted every three years as required by law, providing an overview of the scheme’s status, assets, and liabilities.
He added that it also offers management ideas on measures to ensure the scheme’s sustainability.
During a press conference on Monday, Mr. Poku cited previous projections, including a 2011 report that predicted SSNIT would be unable to pay funds by 2019, to emphasize that such forecasts should be taken with caution.
“The recommendations are not going to happen at all costs, that’s not what it is. So it gives you an idea that based on these assumptions, it’s likely to happen but there is no certainty. So, in 2011, it was projected that the scheme reserved will run or will be depleted.”
“The report (2011) says, among other things, that if contribution rates were not increased in the future, the annual expenditure on benefits and registration would exceed income from contributions and the funds from 2019 would just tank,” he said.
“What it said was that by 2019, we’re not going to have enough money to pay benefits. We are in 2024 and we have never defaulted in payments or benefits from 2019 up to date. So in this report, it’s not different from the reports that we’ve obtained over the years. Like I said, it gives you an idea of where you are going as a scheme, and then you take proactive measures to steer off, if there is any danger ahead of you,” Mr Poku explained.
Following an actuarial valuation study of the Social Security and National Insurance Trusts (SSNIT) viability, the International Labour Organization (ILO) projected a complete depletion of SSNIT’s reserve by 2036.
ILO’s study indicated that total income, including contributions, investment income, and other income, would no longer be sufficient to cover annual expenditures, including benefit payments to pensioners, by 2029.
“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.
SSNIT will rely solely on its reserves to meet payment demands, leading to a gradual depletion process until it reaches zero by 2036, as indicated by the valuation report.
Mr. Poku, while defending SSNIT’s sustainability, emphasized that there was no need for alarm. He acknowledged that reports over the years have consistently emphasized the necessity of increasing contribution rates.
“Ladies and gentlemen, it doesn’t count easy to increase contribution rates. It means the law has to be changed, we need to engage stakeholders, we have the employers, we have the workers as a group, we have our regulator, and the living parliament and government. So it goes through a process, and that process is a bit long,” Mr Poku said.
In an earlier press statement, SSNIT assured Ghanaians that the scheme is not solely funded by reserves and that they have sufficient funds to pay benefits owed to members.
“There has been steady growth in contributions. This growth is well supported by the current demographics and the dedicated activities of our staff in getting new employers and contributors to join the scheme.”
“Investment income has been healthy and would offset any unexpected deficit that may arise…The Trust has never missed any pension payment since 1991, when the pension scheme was introduced.”
SSNIT said the Government of Ghana continued to pay contributions on behalf of its workers, and that “modalities are in place to service the outstanding contributions”.
The Management reassured the public that it would “continue to ensure prudent management of the Fund to meet its benefits payment obligations beyond 2036.”
