Workers urged to invest in Tier-3 pension scheme

Mr William Asiedu Yeboah
Mr William Asiedu Yeboah

The Chief Executive Officer (CEO) of NBC Ghana Limited, Mr William Asiedu Yeboah, has charged workers to make a deliberate effort to invest part of their earnings in the voluntary Tier 3 pension scheme administered by private entities.

In an interview with the Daily Graphic on the various options available to workers in securing their retirement, he said, “the surest way to a happy old age is to save towards pensions.”

He said although every worker retired with the hope of enjoying a good life after years of working life cycle, some got disappointed at the end of their service because some employers failed to pay their workers’ contributions as expected.

However, he explained that the introduction of the two new pension tiers, Tiers 2 and 3 had paved the way for employers and employees to contribute more for a better future.

As per the Pension Act 2008 (Act 766), Ghana operates a three-tier pension scheme. Tier-1 is made up of a mandatory monthly contribution of 13.5 per cent of basic salary managed by the SSNIT. Tier-2 is a mandatory contribution of five per cent basic salary managed by a licensed fund manager while the Tier-3 is an optional contribution also managed by licensed private fund managers.

Being voluntary, contributions to the Tier-3 scheme is up to the employee and employer to determine how much of the employee’s salary will be contributed to this tier.

 One of the benefits of investing in the Tier-3 pension scheme, according to Mr Yeboah, was that  “government will give tax relief on pension at retirement and also one can take his or her pension savings as a tax-free lump sum upon retirement.”

Registered administrator

Mr Yeboah explained that most pensioners went home with relatively huge lump sums as retirement packages but their monthly packages might not be able to sustain them over a long period, thereby forcing them to fall on relatives for help.

 “It is important to do this with a registered pension scheme administrator to avoid disappointment as being witnessed by people who have lost their jobs recently.

 “It is important for pensioners to have an idea about their pension packages before retiring, to enable them to plan well and enjoy their post-working life.”

According to him, investing in the right pension scheme administrator would save one from trauma and make it easier for the bulk sum to be received whenever one decided to do so.

He added that NBC Ghana Trust had built a robust system that could help clients to know their investment anytime.

“While it is good to invest in a pension scheme, it is also important for people to consider the right pension scheme administrator to invest with. An administrator with a strong operating system capable of managing huge data is the best administrator to invest with,” he reiterated.

About NBC

NBC Ghana Limited is part of the NBC Group, a leading force in the African Employee Benefits and Retirement Industry. NBC Group provides a comprehensive range of products and services – including retirement fund administration, consulting and actuarial services to over 140 registered pension and provident funds with more than 600,000 members.

NBC Holdings Limited has its origins from the mid-80s when it championed the establishment of defined contribution schemes in South Africa, a trend that accelerated during the late 80s and early 90s as trade unions gained more influence and companies took advantage of the commercial certainty offered by defined contribution funds in the context of legislative changes regulating inter alia, financial reporting of defined benefit pension fund liabilities.