“Changes in demographic and economic factors in recent decades are creating sustainability challenges for pension systems around the world.
“Factors such as rapidly ageing population, improved life expectancy, and declining fertility rates have affected the timing and level of benefit payments.”
In a statement copied to the Ghana News Agency in Accra on Monday, Mr Mashud said it such factors had prompted most governments and policymakers in other parts of the world to embark on the necessary parametric and legislative reforms to prevent the collapse of public pension systems.
The statement said the OECD 2019 Pension Outlook report said, most countries in the OECD region were responding to demographic and economic changes with reforms that included reviewing contribution rates, increasing normal retirement age (retirement delays), changing fertility policies, etc.
It said in all these, the sub-Saharan Africa region was slow in responding to the global demographic and economic changes, presumably under the assumption that that wave of change had not reached Africa yet.
The statement said just like all defined-benefit schemes around the world, the SSNIT Scheme had experienced the rising cost of benefits primarily due to increased retirement rates, and improved life expectancy.
“These factors have affected the timing of benefits payments, level of benefits, as well the size of the covered workers, their earnings, and the beneficiary population.
“There have been legitimate concerns and calls for reforms by individuals, organizations, including multilateral regarding the long-term solvency of the Basic National Social Security Scheme.
It said the most recent was captured in a pension reform report (under GIZ financed project) in November 2020 which examined proposals for regulatory adjustments of the pension system.
“The parliamentarian argued that with the general improvement in life expectancy due to improved healthcare systems, pensioners live longer after age 60 and that exerts excessive financial pressure on the public pension system and suggested that the age should be extended from the current age 60 to 65.
It said all the red flags raised and calls for pension reforms to improve the financial viability of the SSNIT Scheme were yet to be accorded the needed attention by stakeholders concerned and the true financial state of the scheme had not reached the media and was completely shielded from the public.
“This certainly presents a problem, more especially when the funds on which SSNIT relies to pay benefits are running low, and heading to the point where we are being told that in less than 19 years, the Trust's fund reserves will not be able to support the payment of scheduled benefits in full and on time.”
It said one useful way of reaching the funding objectives of a better managed public pension system was to provide better information on the financial development of the scheme, by regularly reporting on how changing demographic and economic factors interacted with public pension systems.
“In line with best practices, it is essential that the Social Security Administration is made to present a summarized Actuarial Status of the Scheme to the Parliament of Ghana after each triennial Actuarial Valuation Report is released. This will deepen accountability to members of the scheme and smoothen the reform process when the need arises.”
This provision may be incorporated as an amendment to the Act 766.
On the importance of the pension scheme, it said there was no social intervention Programme in Ghana that bore more importance to the financial wellbeing of old citizens and their dependents than social security as it was central to the social and economic well-being of the vulnerable aged population, and it bore so much importance to the attainment of the United Nations Sustainable Development Goals (SDGs).
Many people of all ages are connected to the program including an estimated 1.7 million covered workers.
The statement said the SSNIT Scheme provided steady monthly cash benefits to an estimated 220,000 old-age and invalidity pensioners as well as Lump Sum cash benefits to thousands of bereaved families (mostly widows and orphans).
“To the extent that the sustainability of the system that supplies income security cover for older persons is threatened, policymakers and the Parliament of Ghana need to intervene. “