Low informal pensions; a looming national danger

Low informal pensions; a looming national danger

Last week, we carried a front page story in which the Chief Executive Officer of the National Pensions Regulatory Authority (NPRA), Mr Hayford Atta-Krufi, had disclosed that only a percentage of the working population in the informal sector was on pensions.

Available statistics, he pointed out indicated 85 per cent of the working population in the country were found in the private or informal sector, and yet out of that figure, only one per cent was on one form of pension scheme or another.


The issue before us, as a nation, is very serious and must not be taken lightly, as it paints a very sorry and gloomy picture for the Ghanaian working force — both formal and informal.

Since January 2010, the NPRA, formed under the National Pensions Act, 2008 (Act 766), has been implementing the contributory three-tier pension scheme.

Despite efforts by the authority to whip up interest among the Ghanaian working populace, especially those in the informal sector, to register on the pension scheme, there are still abysmal figures by way of understanding and participating in pension schemes.

Whatever is happening, particularly with informal pensions, cannot be considered or taken as a joke. As a people, we should take note, mend our ways and do well to reverse the trend. This is because, given that every worker or employee today is a potential retiree tomorrow, people must find ways to secure their economic security in old age.

Every person needs retirement income security for the future, even more so because youthfulness is not permanent.

In this country, there are so many challenges with informal pensions. One of them is that we do have a culture of non-contribution to pension, which is a bad practice which must be discarded.

Poverty and old-age, as well as retirement challenges for the Ghanaian worker in the coming years cannot be controlled if this trend of not contributing to pensions is not addressed immediately.

Old age poverty, it is said, is as worse as death. This is because in one’s old age, one becomes vulnerable to sickness and cannot work to earn sustainable income.

Therefore, if one becomes poor in old age, the matter becomes worse.

There is, therefore, the urgent need for the NPRA to map out a strategy to help address this looming national challenge and threat, particularly within the informal sector.

Sustained public education and sensitisation of players in that sector are some of the timely strategies needed to encourage enrolment onto personal pension schemes.

As a nation, we must all be committed to a nationwide outreach programme to educate and sensitise workers to deepen their understanding of the three-tier pension scheme, which seeks to provide for pension benefits that will ensure retirement income security for all workers and a better standard of living.

In this regard, the NPRA further needs to disseminate pension issues, develop an effective and unique strategy to win the trust of Ghanaians and also help whip up their interest in pension schemes.

The laws, in our view, must also be strengthened to make it compulsory for anyone who earns income, be it in the formal or the informal sector, to register on one form of pension or another under the voluntary third-tier Scheme, in compliance with Act 766.

Due to urbanisation, industrialisation and migration, the era when, traditionally, the extended family and the community, to a large extent, addressed the issue of looking after the elderly or aged in society is gone forever.

Pension schemes have now become the necessary substitute for old-age security and also as a modern mechanism to provide retirement income for the aged.

We, therefore, remind all of us to remember our old age, now that we are young, healthy and strong, and save towards it. This will definitely come in handy during our old age. There is the need for decent pensions and none of us can toy with this important task.

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