‘NPRA’s directive to SSNIT will result in financial crisis’
The Social Security and National Insurance Trust (SSNIT) says a directive from the National Pensions Regulatory Authority (NPRA) to review the calculation of past credit will increase the trust's past credit liability to a whopping GH¢5.87 billion.
The effect of the directive, it said, would put the whole SSNIT scheme into financial crisis from 2022, as its fund ratio would drop from 3.1 to 3.0.
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The Director-General of SSNIT, Dr John Ofori-Tenkorang, who said this at a press conference in Accra yesterday, noted that “SSNIT has thoroughly considered the illegal directive from NPRA and noted that it is unable to implement the directive in the authority’s letter dated September 18, 2019”.
“Should this directive, which is not in accordance with Act 766, be implemented, the trust’s past credit liability will increase to a whopping GH¢5.87 billion as of October 2019, representing an increase of GHC4.5 billion over what the liability was before the revision that was accepted in the communique was implemented,” he explained.
The past credit is the contribution of workers to SSNIT before the coming into force of Act 766, which brought about the three-tier pension scheme.
Letter
The letter from the NPRA, among other things, said “the board of the authority finds the implementation date of January 1, 2010 for the computation of the accrued interest on the past credit as undesirable, considering the fact that the said date does not account for interest earned on contributions received prior to January 1, 2010”.
But the Director-General of SSNIT indicated that the statement was factually incorrect because to determine the past credit as of December 31, 2009, the four per cent of salaries had to accumulate interest from the date of contribution till the date of determination of the past credit (December 31, 2019), and “that this was communicated on several occasions to the NPRA in various documents, as I have mentioned, as being 50 per cent of the prevailing treasury bill rate compounded annually in accordance with Section 34(1)(b) of PNDCL 247”.
“The NPRA further directed that the 91-day Government of Ghana Treasury Bill rate applicable should be compounded quarterly from the year of first contribution till the date of payment.
“This directive sought to overturn what has already been lawfully determined by the bodies vested with the authority to do so, as per Section 94(1)(d) of Act 766. This matter has already been closed and communicated to SSNIT by the NPRA in its letter dated September 9, 2015,” he explained.
Formulation
According to Dr Ofori-Tenkorang, the directive from the NPRA was contrary to Section 94(1)(d) of 766, and that the directive also ignored the fact that the formulation agreed in calculating the past credit as of December 31, 2009 was arrived at after several deliberations between SSNIT and NPRA, who were authorised by law to do so.
He said the management of the trust was currently using 100 per cent of the prevailing 91-day Treasury Bill rate to compute interest on the past credit every quarter from January 1, 2010, in consonance with the agreement by the Ministry of Employment and Labour Relations, the Ministry of Finance, NPRA, SSNIT and the Forum for Public Sector Registered Pension Schemes (FORUM), and that the same had been made available to members on their statements of account.
Implementing
The trust, he said, was fully committed to implementing Act 766 and the agreement reached by all parties and would accurately and promptly pay all benefits due members as and when they retired, adding: “In doing so, the trust will always be guided by the long-term sustainability of the scheme.”
He said the SSNIT scheme was a social protection scheme and would at all times protect the welfare of its members and not cheat them.
“Let me also state that the agreement, communique signed should be accepted by all parties and SSNIT is committed to doing so and I call on members of the FORUM to respect the agreement they have signed.
“I want to assure all workers, especially members of the SSNIT scheme, that the trust is committed to the smooth implementation of Act 766 in its entirety and will pay past credit with accrued interest in accordance with the law and the agreement reached by the trust, the government (represented by the ministries of Employment and Labour Relations and Finance), NPRA and labour,” he said, among other things.
The forum
The forum, at a press conference on September 12, 2019, accused SSNIT of foot-dragging with the implementation of the modalities for the past credit, adding that the trust was reluctant to "come out with modalities for the calculation on past credit earned as of December 2009, based on a 100 per cent treasury bill rate, compounded quarterly and the issuance of statements to each contributor”.
The Hedge Master of the Trust Occupational Pension Scheme, Mr Addo, said: "The forum sees the stance of SSNIT as a tactical move to sabotage the smooth implementation of the three-tier pension scheme, which is scheduled to be fully operational with effect from January 1, 2020."