The Social Security and National Insurance Trust (SSNIT) says for the month of August alone, it paid GH¢1,655, 234.00 to 1,4977 of its members who make up the list of invalid pensioners.
This figure was contained in a speech by the Director General of SSNIT, John Ofori-Tenkorang, read on his behalf by his Deputy, Mr. Michael Addo at the 2021 edition of the Annual Business Forum for Forty Under 40.
“Friends, if age 60 seems like too long a time to wait to claim a benefit, consider a situation where you or your worker has been declared invalid and incapable of engaging in any income generating activity. Old age may be far, but permanent invalidity may be minutes away. With just 12 months of contributions within the past 36 months, you will be guaranteed an Invalidity Pension for life or until you recover. And by the way, there are several people of your age who are receiving monthly Invalidity Pension from SSNIT. Indeed, there are 1,497 Invalid Pensioners on the pension payroll and just last month (August 2021), we paid over 1.65 million cedis (GHS1,655, 234.00),” he told the gathering of business managers and entrepreneurs nominated for this year’s Forty Under 40 Awards,” he said.
The Director General outlined the processes and importance for employers to pay their employees contributions as stipulated by law.
According to him, SSNIT has spent a total amount of GH¢2.13 billion on benefit payments by the end of August this year.
“Distinguished nominees, it is our desire that no employer defaults in the discharge of their social security obligations. When you violate any of these provisions, the Trust is compelled to take legal action against you because as I said, the law places an obligation on us to pay benefits to workers or their dependents. And as at the end of August 2021, we had spent over 2.13 billion (2,127,593,594.67) paying benefits,” he stated.
He disclosed that while the scheme does not take delight in taking legal actions against employees for non-compliance, it is obliged and committed to enforcing the laws and has taken legal action against 13,278 employers for various offences including failure to register their establishments and workers and failure to submit contributions.
In his concluding remarks, the Director General entreated the business owners and entrepreneurs to see the payment of their employees pension benefits not just as a response to their legal obligations but a contribution to the future financial well-being of their workers, adding that it also helps in enhancing employee loyalty and commitment,
He further assured that SSNIT will continue to explore various platforms that facilitate easy payment of workers contributions.
“We will continue to engage you as valuable partners of the Scheme with the aim of serving you better. We value your comments thus our doors remain open. The feedback you give is vital in shaping our operations and service delivery,” he said.
Read the full address below:
SPEECH BY THE SSNIT DIRECTOR-GENERAL, DR. JOHN OFORI-TENKORANG, AT THE ANNUAL BUSINESS FORUM FOR FORTY UNDER 40
Date: 16th September, 2021
Venue: Sunlodge Hotel, Tesano
Distinguished Leaders of Business and nominees for the Forty under 40 Awards,
Good morning.
Let me start by first congratulating all of you gathered here for making it to the list of 100 nominees from across the country to be considered for this year’s Forty under 40 Awards.
I also thank the organisers of the event for creating this platform for me to interact with you. I must say that I’m excited every time we have an opportunity to meet stakeholders of the Scheme. This is borne out of four main convictions; my belief in transparency, accountability, service delivery and stakeholder buy-in. Fortunately, we have you; employers and employees at this Business Forum. As I’ve said before, the Social Security and National Insurance Trust (SSNIT) Scheme and the monies in there are for Members. This means Members have the right to information and to question how the scheme is run. We can only answer these questions without fear, if we are transparent. Transparency will mean full disclosure on our part, bringing Members up to speed on our operations and their contributions and how we are discharging our obligations as stipulated by law. And all of this must be served on a platter of world class service delivery.
Ladies and gentlemen, my job this morning, is to share briefly with you, your obligations under the National Pensions Act, Act 766, which governs the operations of SSNIT.
The Pensions Act, establishes a three-tier pension scheme. The first and second tiers are compulsory. They are funded by both employers and workers.
As operator of the First Tier Scheme, our primary objective is to provide retirement benefit to workers during old age or in the event of permanent invalidity once they meet the qualifying criteria. We pay these pensions, be it Old Age or Invalidity, throughout the lifetime of the pensioner. For non-Ghanaian workers in the country, they are paid a one-time lump sum which is a refund of their contributions plus interest when they are permanently leaving the country. We can only be able to meet our obligations to workers or pensioners if you fulfil yours as employers and Members of the Scheme.
Obligations of the Employer
So, permit me to share with you, what you are expected to do as entrepreneurs or employers to secure your workers’ future. As employers, you must register your businesses and every worker you engage with the social security scheme within 30 days of commencing operations.
Beyond registering, you have to pay contributions for every employee, whether permanent or temporary. The total compulsory contributions that is made to SSNIT and the second tier fund managers is 18.5% of the worker’s basic salary. And so, at the end of every month, you are required as employers, to deduct 5.5% of your workers’ salaries and top it up with 13% (based on those same salaries) making 18.5%. Part of this, that is, 13.5% is remitted to SSNIT not later than the 14th day of the ensuing month. So, for September contributions, you have up to 14th October to pay. Late payment attracts interest or penalty. The 5% is paid to a second tier fund manager of your choice.
At the end of every month, you are supposed to provide SSNIT with a list of your workers and their corresponding salaries (whether the salaries have been paid or not). We refer to this as the Contribution Report. You can email it to us or submit it at the nearest SSNIT Branch. But we advise that you validate it yourself in the comfort of your offices using our web portal to generate the bill for payment (Payment Advice). With the Payment Advice, you can pay at the nearest SSNIT Branch or any of our 20 partner banks across the country.
The contributions or premiums you pay, must be based on the correct salaries of the workers because that will be used in computing their benefits. So if you under-declare salaries, it will lead to low pensions.
Handling employer non-compliance
Distinguished nominees, it is our desire that no employer defaults in the discharge of their social security obligations. When you violate any of these provisions, the Trust is compelled to take legal action against you because as I said, the law places an obligation on us to pay benefits to workers or their dependants. And as at the end of August 2021, we had spent over 2.13 billion (2,127,593,594.67) paying benefits.
Exercising the option of prosecution is however the last resort because we understand that businesses go through hard times. So when employers default, we show up with a demand notice and provide a 30-day grace period within which they must pay up or negotiate mutually beneficial terms of settlement. It is only when employers fail to do these that we institute legal action against them.
We are also not eager to take legal action because we believe that the enormous benefits the Scheme offers Members should motivate you and all employers to contribute voluntarily. What I mean is that, the thought of contributing only 13.5% of your salaries, so you, as well as your workers or colleagues can receive up to 60% of the average of your three best years’ salaries when you retire should encourage you to be regular with your contribution payments. And by the way, your pension will be paid with annual increment throughout your lifetime as a pensioner.
Friends, if age 60 seems like too long a time to wait to claim a benefit, consider a situation where you or your worker has been declared invalid and incapable of engaging any in income generating activity. Old age may be far, but permanent invalidity may be minutes away. With just 12 months of contributions within the past 36 months, you will be guaranteed an Invalidity Pension for life or until you recover. And by the way, there are several people of your age who are receiving monthly Invalidity Pension from SSNIT. Indeed, there are 1,497 Invalid Pensioners on the pension payroll and just last month (August 2021), we paid over 1.65 million cedis (GHS1,655, 234.00).
Maybe, another reason why you will not want to default in your social security obligations, is the cushioning we provide your dependants and those of your workers. For as you may know, when a contributor or a pensioner below age 75 passes on, a lump sum is paid to the nominated dependants.
In spite of these benefits, as at the end of August 2021, we had to initiate court cases against 13, 278 employers for various offences including failure to register their establishments and workers and failure to submit Contribution Reports.
Most of these cases relate to failure to pay contributions and associated penalties. These employers, aside being compelled to pay the contributions that may be owed, risk being fined up to a maximum 30,000 Ghana Cedis or a prison term not exceeding five years or to both. This should tell you the premium that is placed on securing the future of workers in Ghana.
These court actions are a drain on both employers and the Trust. They can negatively affect the image of the defaulting establishment as well. This is certainly not the way we want to go.
We want to have a pension system where majority of employers will voluntarily comply and avoid the payment of needless penalties. Payment of penalties is a huge cost to businesses and impairs organisational reputation. So this morning, if there is one message I’d like to strongly emphasise, then it is for you, as young employers and people of repute, to pay the social security contributions on time or ensure your employers pay on time, that is, by the 14th of the succeeding month. Also, avoid the temptation of paying only for your workers because its compulsory and leaving your name off the Contribution Report.
Conclusion
I urge you, distinguished nominees of the Forty under 40 Awards, to see the social security premiums you pay as a contribution to the future financial wellbeing of your workers and not necessarily a response to demands by the law. This helps in enhancing employee commitment and loyalty.
You have a responsibility first towards yourselves as workers and as employers.
I want to assure you that we shall continue to explore various options to create platforms that facilitate easy payment of workers’ contributions. We will continue to engage you as valuable partners of the Scheme with the aim of serving you better. We value your comments thus our doors remain open. The feedback you give is vital in shaping our operations and service delivery. I therefore encourage you to call our Contact Centre on 0302 611 622, email us via [email protected] or get interactive on Facebook, Instagram or Twitter @ssnitGhana and share your concerns.
On that note, ladies and gentlemen, I thank you for your attention.