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THE IMPACT Of THE SSNIT PENSION SQiEME 
ON RfTIRED WORKERS IN NJ::RA 
MARY NAGETEY (MRS) 
,., DI5SCRTATIC»I TO THE SOCIOLOGY DEPARTMENT 
UNIVERSITY OF GHA/IIA, LEGON 
IN PARllAL F\JlFIU'IENT OF THE REQUIREMENTS FOR THE AWAAD OF 
I':~ OF ARTS DEGREE IN SOCIOLOGY 
I\ugust, 1999 
University of GDhaEnCaL hAtRtpA:/T/uIOgsNp ace.ug.edu.gh
I hereby declare that this work was undertaken by me, Mary Nagetey. I further 
affirm that this work has never been submitted to any University in part or whole 
for a degree or diploma. 
M~ 
(Student) 
Mr. T. E. Richardson 
(Supervisor) 
Date: ~ 
Nana Apt Van Ham (Pro~ 
(Supervisor) 
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DEDICATION 
To Kofi my husband, Priscilla , Dinah and Andy my kids 
and 
To my mum and sister Dorcas 
Table of contents 
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Page 
Abstract 
Acknowledgement 
List of Tables 
1 
1.0 Introduction 
1.1 Research Problem 2 
1.2 Objectives of the Study 5 
1.3 Hypothesis 5 
1.4 Conceptual Framework 6 
1.5 LiteratureReview 10 
1.6 Area of Study 20 
1.7 Methodology 20 
1.8 Methods of Fieldwork 21 
#? 
2.0 Social Security in Ghana 23 t,\;_ 
2.1 Traditional Social Security System 23 
2.2 Transition to Modern Social security 24 
2.3 Modern Day Social Security 25 
2.4 Concepts and Principles of Social Security 26 
2.5 Social Security in Ghana 31 
2.6 The SSNIT Pension Scheme 34 
2.7 Financial Management of the Scheme 4 1 
3.0 Data Analysis and Findings 
3.1 Personal Information of Respondents 44 
3.2 Analysis of the Scheme 47 
3.3 Evaluation of the Scheme 56 
3.4 Perception of the Scheme 63 
3.5 Provision of other benefits apart from pensions 65 
3.6 Problems about the Scheme 68 
3.7 Ufe After Retirement 70 
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Page 
75 
4.0 SummaI)' of Findings, Conclusion and Recommendations 75 
4.1 SummaI)' of Findings 75 
4.2 Conclusion of Findings 80 
4.3 Suggestions and Recommendations 81 
Bibliography 88 
Specimen Questionnaire 
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The SSNlT Pension scheme was Instituted (coverted from Provident Fund ) In 
1991 with the promulgation of PNDC Law 247 to pay benefits I~ the event of 
some specified contingencies namely: old age, death and Invalidity 
The study focused on the old age benefits paid to retired workers (c:ontributors) 
which is deemed as a replacement of their lost Income Benefits paid range 
between fifty and eighty percent of ones best three years' salary 
Though the system has been in operation for sometime now, Its Impact has not 
been well felt due to the low levels of pension Income paid to majority of Its 
benefiClanes 
The main cause of these low penSion levels has been the general poverty level In 
the country To make matters worse, economY-Wide factors such as high 
Inflationary rates, high cost of hVlng erode the real Incomes of the pensioners 
Hence, post-retirement life is extremely difficult for the vast majority 
The objective of the study was therefore to find out other supplementary benefits 
that penSioners might require from the scheme to ease the effect of inflation on 
thetrrealincomes 
Perhaps It IS expedient for Management of the scheme to review the scheme to 
respond to the demands of its retired workers by offering some supplementary 
benefits In addition, there IS the need for the Institution of other complementary 
schemes to ens~re adequate Income to enable retired workers live a meaningful 
post-rettrementhfe 
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ACKNOWLEDGEMENT 
I wish to acknowledge with much appreciation the help I received from many 
people that enabled me write this essay 
~~. ~~~~~~~~i;:~~a!~~;;~~!~U~~ri~i~fs~i:~~ :~~~~~~oan~~~~=nm~~~ t~~sd 
essay what it is . I very much acknowledge their invaluable and indispensable 
help offered me 
My appreciation goes to my husband Kofi for his advice, patience. love, moral 
support and above all , the effort put into editing this script 
I lake this opportunity to once again acknowledge my mum who took care of my 
kIds in my absence, my sister Dorcas for her invaluable assistance and my kids 
for their understanding 
I cannot bring this acknowledgement to an end without mentioning my friend Mrs 
Grace Andoh-Bissue for her encouragement and for being a source of inspiration 
tome. 
Finally, I need to put on record the help I received from all my friends especially , 
Ben Markin-Yankah and Sarah Allotey . My appreciation also goes to Doreen 
Tawiah who patiently typed the essay for me. 
I mus.t however emp~asise: that I am solely responsible for any shortcoming 
marginal or substantial which may be found in this essay 
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Age Distribution of Respondents 
VolWltarylCompuisory Retirement of Respondents 45 
First Pension Payment of Respondenls 
First Pension against Current Pension Payment 
Satisfaction with Pensions Paid 
Reasons for Position 
Option for 25% Lumpsum 
Reasons for Option 
Claim Processing Period 57 
Claim Processing Period against First Pension payment 58 
Processing Period of Claims against Satisfaction of Respondent s 
ReguiarityofPension Payment 
13. Promptness of Pension Payments 
Rating of the Scheme 62 
Vie",son Ihe Scheme 
Provision of other Benefits 65 
Agc-ofrespondenrsagainstProvisionofOtherBenefits 68 
Problems Observed aboul the Scheme 
Reasons for Impressions about life since Retirement 
Financial Changes afier by Gender 
Reasons for Financial Changes after Retirement 13 
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1.0 INTRODUCTION 
After years of hard work, it is expected thai a retiree enjoys the fruits of 
his labour. Thus social security and employer pensions were established to 
cater for and provide income protection for the retired worker. These pension 
benefits are mainly in the form of monthly pension payments received from 
social security institutions by the retired worker. Most of these institutions 
operate a contributory scheme where workers contribute a percentage of their 
salaries during their working life and expect to be paid some benefit for as long 
as they live. or for a specified period depending on the type of scheme they 
belongta. 
In Ghana, the Social Security and National Insurance Trust (SSNIT) is the 
institution that provides basic social security to its members. In 1965, the 
government of the Conventions Peoples Party (CPP) introduced a formal social 
security scheme. Workers and their employers were required by law to make 
monthly contributions into the fund which was set up to provide certain 
contingencies to workers . 
Workers were expected to contribute a total of 17.5% of their salaries (Le. 
5% employee and 12.5% employer) to the fund during their working life. This 
system developed over the years and in 1991 was converted into a pension 
scheme for workers. The scheme makes provision for only three contingencies; 
these are old age, death and invalidity benefits. It attempts to provide a 
comprehensive coverage for all workers in Ghana with the sole idea of ensuring 
income.maintenance for the future. 
UpUonn irveetirresmiteyn ot. fd Geahtha noar  ihnvttapli:d/i/tuy gosf pthaec me.eumgb.eerd, uth.eg hscheme pays the 
appropriate benefits to the member. In the case of old age benefits, which this 
study seeks to examine, retired members are paid benefits in the form of 
pensions commensurate with their age and number of months worked at the 
point of retirement, which is the main qualifying condition for payment of old age 
benefits. The scheme provides between 50% and 80% of the average of three 
best years of pre-retirement salaries as pension income. 
The pensioner in this case, receives monthly pension income for as long 
as he lives or a lumpsum in the case where the retiree does not meet the 
required qualifying condition of the scheme. However should the pensioner die 
before age 72, the unexpired portion of his benefits (I.e. benefits that would have 
been paid between the age the pensioner died and age 72), is paid to his 
dependants. These pension benefits received by the retired worker is deemed 
as a replacement of his lost income 
1.1 Research Problem 
Social security benefits has been almost entirely the sole source of 
income to most retired workers (contributors) in Ghana since the introduction of 
the scheme in 19 65. This has been the case as there has been a decline in 
the functions performed by the extended family system that hitherto provided a 
safety net for needy members of the family in the form of hospitality, protection 
and support for both the young and old. The extended family system has 
undergone a drastic change due to economic difficulties and other social factors 
such as migration and education which have gradually pushed the population to 
individualism. 
In view of this, the responsibility of caring for the aged and for that matter 
the pensioner does not rest much on the family . Workers are therefore in a way 
expected to make proviSions for their post-retirement life in order to sustain their 
income after retirement 
For thUis nreivaesorsni,t yp eoofp lGe hina tnhae irh wttopr:k/i/nugg ysepaarsc ea.rueg in.e ad uw.agyh compelled to 
set aside part of their income when working to the social security fund which will 
provide them with a basic floor of income protection when they retire . As at 
December 1998. the scheme covered a total active contributors of 632,235 from 
the following institutions: Private (49.51 %). Government establishment (44.50%) 
andsubvented organisations (5.99%). 
Currently, the scheme has on its payroll , over 30,000 pensioners and 
pays a basic monthly minimum pension of ¢8,500. That is to say, all pensions 
that fall below this figure after calculation, are automatically placed on an income 
of ¢8,500. The scheme has however attempted in a modest way to use the 
technique of indexing pension to preserve real income of its retired members 
For this reason, each year, beginning from 1992, pensions have been indexed 
by a factor that takes into account the prevailing rate of inflation. 
Inflation is one of the intractable problems the Ghanaian economy has 
faced for a very long time (Sowa and Kwakye 1994). Since 1972 inflation has 
remained generally high, ranging between 10% in 1972 and 123% in 1983. 
Inflation rates in the 1990s have been no different recording 10% in 1992, 27.4% 
in 1993. 24.9% in 1994, 70.8% in 1995 and 42.6% in 1996. 
The very high rates of inflation experienced in Ghana have immensely 
undermined the otherwise impressive macro-economic performance since the 
introduction of Economic Recovery Programme (ERP) in 1983 (Sowa and 
Kwakye 1994). They state further that inflation rates have continued to be 
above targets set within the ERP at 25% or more since 1986. 
The Significantly high rates of inflation experienced in the economy has 
resulted in the fact that for any general increases in wage rates and pension 
Incomes, the intended effects in terms of increases in purchasing power are 
eroded. AlsoU, nit imveearsnsit yth oatf  sGochiaaln sae chutrtipty: /p/eungssiopnasc aen.du glu.medpsuu.mgh payments are 
put under stress since the real monetary value is eroded, meaning continual 
adjustment in indexation level of payments to meet expectations of retired 
workers. High rates of inflation have resulted in high cost of living in the 
economy in terms of high prices of goods and services. 
Furthermore, low incomes of workers in Ghana have greatly contributed 
to the plight of workers in their post-retirement life. Due to low incomes 
generally received by workers in the country coupled with the high cost of living, 
it is virtually impossible for Ghanaian workers to save money for the future apart 
from the compulsory deductions made from their salaries towards the pension 
fund . This problem can be traced to the general poverty level in Ghana. 
Poverty has been defined as a state in which an individual or group of 
persons cannot meet the basic necessities of life either because they cannot 
afford them or the necessities are not available or both (Asenso-Okyere, Asante, 
Gyekye, 1991). Ghana's poverty as noted by the above has been caused 
primarily by a number of factors such as low income. High unemployment rate is 
an additional factor in the economy that has also increased the dimension of 
poverty in Ghana. They noted further that the private sector responses to 
Ghana's reforms has been below expectation so that many workers who were 
laid off from the public sector cannot still find jobs in the private sector. The 
long-run effect of this problem is that contributions made towards the scheme is 
so low that pensions paid later as social security benefits are equally low. 
The above discussed issues have made the pensioner worse off because 
contributions made towards the scheme are very low resulting in low pensions 
and also because he cannot save and invest money towards the future all due to 
the low incomes received. 
OtUhenr ievmerpsloityym oenf tG-rehlaatneda  fhatcttpor:s// usgucshp aasc efr.iungge.e bdeun.egfihts and other free 
or subsidized services that cease upon retirement also add to the plight of the 
Ghanaian pensioner. Most retired workers in Ghana cannot therefore live a 
good and quality life. 
Low savings, if any, resulting from low incomes has meant that retired 
workers in Ghana continue to rely almost entirely on social security benefits 
which seem inadequate for a decent living. 
The study seeks to examine the objectives of the Pension scheme and in 
the light of the above discussed issues, find out how effective the scheme has 
been as a sound safety net providing a minimum income for subsistence, using 
pensioners in Accra as a test case. 
1.2 Objectives of the Study 
This study seeks to find out the extent to which the pension benefit 
represents lost income to the retired worker. As a corollary, it will seek to find 
out what supplementary benefits pensioners expect from the scheme to make up 
the inadequacies of incomes received 
A minor objective is to find out whether the major objectives of the SSNIT 
pension scheme in respect of the provision of services such as prompt payment 
of pensions and provision of efficient services to its retired contributors are being 
aChieved. This is vital because if payments are irregular and untimely, 
beneficiaries are likely to encounter financial problems. 
1.3 Hypothesis 
. The purchasing power of pension incomes paid by the SSNIT is a 
function of the rate of inflation. Thus the higher the rate of inflation. the lower the 
real incomes of pensioners. 
ThUernefiovree,r siatsy  oaf  Gmhinaonr ah yhpttopth:/e/suisg,s pthaec elo.uwge.re dthue. ghreal incomes of 
pensioners, the higher the demand will be for other benefits or services as 
supplements to pension incomes. 
1.4 Conceptual Framework 
From the perspective of Sociology, social aging consists of passage from 
one socially defined position to another in the course of growing up and growing 
old. The idea of old age is not simply a role adopted at a certain chronological 
age - an experience which can be considered in isolation from the rest of the life 
course. Ageing is often seen as a social problem viewed from one or more basic 
perspectives. The Structural Functional Theory is instructive in this regard in 
explaining the functions of the various institutions in the society for the 
continuance of the social reality. It will then offer perspectives and explanation 
on how the functions of the family is gradually being substituted by a 
Government institution due to changes in the entire society which has in turn 
caused changes in the functions performed by the family. 
From the functionalist perspective, ageing is a problem because the 
institutions of modern society may not be functioning well enough to serve the 
needs of the dependent aged. In trying to identify this new social reality in its 
broadest sense, there is the need to look at the functioning of the whole society 
and its institutions or subsystems. If it is a reality that a certain institution is no 
longer filling a fUnction because of change, it is important to look at the whole 
system to see the cause. This change may be due to changes in another 
institution. 
Merton for example, sees functional theorizing as potentially embracing 
these postulates: the functional unity of the social systems, the functional 
universality of functional items and the indispensability of functional items and 
social systems 
AccordUinngiv etor sihtyim o, f sGochiaaln as yhsttetpm:s// urgesvepaal ces.oucgia.l edinute.gghration into a 
necessary requisite or need for social survival . They represent a focal point for 
integration between individuals, their needs and the necessity for group living 
among humans. Furthermore, some anthropologists have assumed that if a 
social item existed in an ongoing system, it must therefore have had positive 
consequences for the integration of the social system. That is to sayan item IS a 
part of a system therefore the item is positively functional for the maintenance of 
the system. 
The important idea in the functional system theory is that there is an inter-
dependence among institutions. As Buckley ( 1971) says, each component of 
the system is related to others in a causal network. Alvin Gouldner also asserts 
that a change in one part of the system may yield unforeseen and undesirable 
consequences in another part of the system due to the inter-dependence of its 
elements (Gouldner 1970 p. 648). 
The family as an institution is seen as a functional requisite for the 
maintenance of the aged in society. The Encyclopaedia of Social Sciences 
defines functional requisite as ~a generalised condition necessary for the 
maintenance of the type of unit under consideration given the level of 
generalisation and the most general setting of the unir. It concerns itself with 
"what must be done to maintain the system concerned in its setting on the level 
under consideration~. To the structural functionalist, a given condition is 
functional requisite if its removal would result in the total dissolution of the unit, 
or the change of one of the structural elements of the unit or the level of 
consideration. 
A mosUt nadivmeirrasbitley  aosfp Gecht aonf tah eh ettxpte:/n/duegds fpaamciley .suygs.teemd uis. gthhe mutual help 
among members both in routine circumstances and crisis situations. It is thought 
of as maintaining a set of social relations , or rights and duties which is essential 
for carrying out purposive activities in pursuit of individually and culturally given 
ends of a society. As a sub·system, it contributes in no small way to the 
maintenance of the social structure performing its functions of child care, 
maintenance of the needy members and the aged of society, which the 
sociologist considers as functional prerequisite. 
However. the greater social mobility and shift to nuclear family as a basic 
kinship unit have weakened the extended family system which once allowed 
elderly people to live out their lives among their kin . The solace solidarity, 
mutual helpfulness, interdependence and concern for the well being of the 
individual member which were derived from the extended family system is now 
being eroded . Migration, urbanization, education and wage labour are the main 
factors within the broad socio·economic changes that are affecting the structure 
and support system of the family (Apt, 1985). The erosion of this system 
culminates in the individualistic mode of existence. 
In this situation. there is a disequilibrium in the social structure which 
means that all parts of the system are not working together smoothly or are out 
of balance. According to the functionalist/system theory, the whole society is 
dynamic therefore. the disequilibrium is temporary. The society will necessarily 
move to a new equilibrium or stable stale because adjustments occur to take 
care of tensions caused by changes usually by a traditional institution. However. 
there are situations where the society or need meeting institution is unable to 
adjust itself into a new state of equilibrium. This is a critique of the functionalist 
theory that assumes that the society automatically adjusts to changes that occur 
to ensure equilibrium in the social structure 
In theU envievnet rtshiatyt  tohef  Gsohcaientya  ish tutpna:/b/uleg tsop aauctoem.uagti.ceadllyu .agdhjust, a gap or 
vacuum is created which must necessarily be filled by an alternative institution. 
Theorists call this the use of Functional Alternatives Le. when changes cause 
the normal need·meeting institution to have difficulty in filling a function ; an 
alternative institution takes over. The sociological reasoning here is that either 
the society automatically adjusts to the change, or the social policy planner or 
other professional bodies step in and provide a programme 
With the diSintegration and malfunctioning of the extended family, 
alternative institutions are developed either by the government through policies 
and by other private bodies to provide some sort of assistance in the form of 
financial support for the elderly to maintain equilibrium in the social structure. 
These include factors such as accumulation of pension rights, access to and 
participation in pension schemes and the availability of residential 
accommodation. All these act as supporting institutions at the later stages of the 
life course for the survival and maintenance of the social system. As asserted 
by Merton these factors are indispensable for the survival and unity of the social 
system. 
The idea here is that, there are functional alternatives; that is to say, a 
function can be performed by different institutions in a society or conversely, 
several institutions can perform the same or similar functions. The family in this 
regard is not the only institution that can carry on the function of the care of the 
elderly; other welfare institutions can carry out this function . Kahn (1983), also 
assumes that because of changes in the family, the economy or the social 
welfare institution will have to take on the job of bringing a substitute for meeting 
a need or an institution providing support to the traditional need.meeting 
institution. 
ToUdanyi vperirvsaittey  roeft irGemhaennta p hlatntps :/a/rueg ismppaocrtean.ut ge.ceodnuom.gihc mechanism for 
providing income for old age. These plans have shown significant growth since 
1950 when pension plans first became accepted as a proper issue for collective 
bargaining. This institutional intervention however, may also have its drawbacks; 
they may have consequences society did not expect. That is to say, they have 
manifest and latent functions. For instance some legislators fear that a latent 
function of a guaranteed annual income will be to decrease work incentive 
(Huffman 1961). Social security schemes as institutional interventions for that 
matter have had unexpected consequences to deal with . In view of this, life 
course events prior to retirement influence the social and economiC position of 
the people well beyond the age of withdrawal from the labour market. 
1.5 Literature Review 
Research and literature existing in the area of social security and social 
insurance schemes is quite limited. Available literature indicate however that 
generally, notwithstanding the fact that developed countries have relatively high 
proportion of the elderly, they have come close to achieving universal coverage 
for its members through broad social security schemes. For the developing 
countries however, particularly Africa, where the majority of their population live 
at subsistence levels, income security is a principal concern. Where there are 
social security programmes, their coverage is at best limited to the modern 
fonnal sector employment 
Although most developing countries have long had some formal public 
and or private pension programme, their coverage has often been limited to 
formal labour markets in urban areas. Old age security for the rest of the 
population has been provided through extended family arrangements, mutual aid 
societie.s and other infonnal mechanisms. But as extended family ties weaken 
due to urbanisation and mobility, and as the proportion of the population that is 
old grows due to medical improvements and declining fertility, these countries 
are forced to re-evaluate their degree of reliance on informal system. 
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This is now happening in many African and Asian countries. The 
challenge facing them now is how to shift to formal systems of income 
maintenance without accelerating the decline in informal systems and how to 
avoid the mistakes that other countries have made as they designed their formal 
systems 
The need to re-evaluate policy is even more pressing for countries that in 
the past introduced formal programmes of old age security whose costs have 
now risen to a point that they can no longer afford as in many Latin American 
and Eastern European countries (Estelle: World Bank 1992). 
In Africa, modem systems of social protection for the aged were 
introduced very gradually prior to 1960, the year when most African countries 
gained their independence. The trend however, gained momentum after 1960 
and more particularly during the last three decades. By March 1999, public 
mandated pension schemes were already in existence in thirty-nine (39) 
countries while Provident Fund Schemes were being administered in four (4) 
countries (Ejuba 1999). 
Aging is not considered a major pre-occupation in most African countries, 
as it does not threaten the economic, social and political institutions (Ejuba 
1999). Firstly Africa has a young population: 0-14 years constitute about 50% of 
the total population in most countries. Secondly, the aging population is very 
low. It averaged about 5.2% in 1999 as compared to 18.6% in Western Europe 
and North America, and 13.8% in Eastern Europe and the former Soviet Union. 
The proportion of Africa's elderly population 65 years and above on 
average stands at 3.0%. It is the lowest of any world region. Nevertheless the 
proportion is expected to increase enormously by 2025 (Apt. 1997). This is 
confirmed byU UnSiv Beurrseiatyu  ooff  CGehnsaunsa 1 h9t9t2pl:h//autg thsep galcoeba.ul pgo.epudluat.igonh aged 65 and 
above is estimated to be 342 million persons in 1992, or 6.2% of the world total. 
Th is represents an absolute increase of 9.7 million since 1991 . The current 
issue is that developing countries are aging at a more rapid rate than in the 
developed world. The current growth rate of the elderly in developing countries 
is double that of the world's population of all ages (US Bureau of Census, 1992). 
The need to provide protection for the elderly by guaranteeing them a 
basic income has long been recognised as a fundamental objective of social 
protection (Ejuba 1999). With the attainment of independence of most African 
states in 1960, the introduction of old age protection schemes with the technical 
assistance of the IlO office gained a new dimension. The need for effective 
social security protection is increasing as can be seen from the number of 
countries that have established mandatory pension schemes during the past 
three decades. 
International labour Organisation (llO) report on social security (1997) 
stated that one of the principles of social security coming out of the Beveridge 
Report and the IlO Income Security Recommendation 1944 (No.67) is that of 
universal coverage: protection to be extended to the national community as a 
whole. Social Security is not the aspiration of only one social class, certain 
professional categories or under·privileged groups. It should meet the needs of 
all workers and as a human right, those of all the population 
It is therefore a question of eliminating inequality between social or 
occupational groups and of establishing general solidarity on the part of the 
community for the benefit of residents. The tendency in industrialised countries 
is to widen coverage and to make protection universally available even though 
the ultimate objective of this doctrine has not yet been attained anywhere (ILO 
1997). 
In devUenloipviengr scitoyu notfr ieGsh, aexntaen hsitotnp :/o/fu cgosvpearacgee. uisg .aend oub.gjehctive which is 
difficult to achieve. In some countries coverage continues to extend only to civil 
servants. In most African countries for instance, coverage is confined to wage-
earners or certain categories of this group, while the vast majority of the 
population does not receive protection of any kind (Ejuba 1999). Only in nine (9) 
countries has protection been extended to non-wage earners in Algeria , Egypt, 
Equatorial Guinea, Gabon, libyan Arab Jamahirija. Botswana. Mauritius etc. 
Most of the scheme in French-speaking Africa covers domestic servants while 
the majority of the schemes exclude casual or temporary workers. In other 
countries. such as Nigeria, Sudan, liberia, establishments with less than five (5) 
employees are excluded. This used to be the case in Ghana until the law was 
repealed with the conversion from Provident Fund to Pension Scheme. The 
majority of countries base their decisions concerning the scope of pension 
schemes on the existence of employer- employee relationships 
The fLO (1997) report further indicate that progress in expanding 
coverage of schemes is certainly less rapid in developing countries than in 
industrialised countries. Nevertheless, compulsory protection is gradually 
spreading. Excluded categories are also being reduced. Some developing 
countries have widened the coverage of pension protection to some or all self-
employed workers. In Ghana, the social security law makes it compulsory for all 
Ghanaians in formal employment to contribute to the scheme and this is 
enforced: membership however is vOluntary for those in the informal sector and 
coverage of this sector has not so far been really extensive. 
Due to the heterogeneous nature of this sector, the social security 
scheme is being adopted to suit the special features of the sector in terms of the 
coverage. In the light of that, some efforts made so far by the SSNIT to promote 
the sector and to encourage their membership of the scheme include the 
following : 
construction of market stalls for a number of people in that sector, 
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with the hope that it would be a basis for encouraging their 
enrollment with the scheme 
construction of industrial estates and abattoirs for similar reasons, 
iii) a comprehensive study with the support of the World Bank to 
provide a blue·print for total coverage of the sector. 
Virtually throughout the world , old age pension schemes are modem 
methods used to maintain the standard of living of the elderly. Old·age pensions 
are the most important of all social security benefits not only from the economic 
and financial point of view but also from the psychological and political view 
Recent researches conducted have proven the fact that, survival for the 
majority of the aged particularly after retirement depends mostly on benefits 
received from social insurance schemes. The objectives of social security is 
broadly seen as public action, including that by the communities, to protect the 
poor and vulnerable from adverse changes in standard of living. Social security 
is also to protect the poor and ensure that they have an acceptable standard of 
living. 
ILO report on pension schemes (1997) states that the common objective 
of old·age protection schemes is to guarantee income security to the elderly, by 
means of the payment of cash benefits intended to form the major part if not the 
totality of their income. Estelle (1992) also indicates that benefit offered need to 
replace only a fraction of earnings during the working years. Most industrial 
market economies limit the replacement rate to between 40% and 60% earnings 
This amount is not enough to provide basic protection (Estelle 1992). 
AtchleUy n(1iv9e88r)s irtey.a offifr mGsh Laonrda  Bhettvpe:r/id/ugeg'ssp aascsee.rutiogn. ethdaut .g-thhe purpose of 
social security is to abolish want by guaranteeing every citizen an adequate 
income at all times to meet one's needs. In this case, the objective of social 
security is to guarantee each person a minimum livelihood through better 
distribution of income". Scotland (1973) similarly argues that whatever method 
adopted, the primary aim of social security has been to replace income lost 
because of broad social and economic factors or to provide a minimum floor of 
protection through the maintenance of minimum cash income. 
This can mostly be experienced in the fast developing states or in the 
advanced countries. Unfortunately, in the third world countries and for that 
matter in Africa and Ghana in particular, the situation is rather different. Most 
workers who retire are unable to live good and quality lives for the reason that 
they have not adequately prepared themselves for retirement (Lloyd Evans 
1999). He admits further that the political systems that most African states 
operate do not also lend itself to support workers during retirement. 
Greevey (World Bank 1990) reported that in Latin America for instance, 
the poor and especially the rural poor are for the most part denied access to this 
benefit. Pension benefits which are generally tied to earnings tend to be skewed 
toward those with higher incomes during their working lives, and are thus 
captured disproportionately by higher income groups both within the social 
security programme itself and when compared to the population as a whole. 
Those who need social security tend to be the ones who get the least from 
existing schemes. (Greevey 1990). The situation existing in other developing 
countries and for that matter Africa may not be any different. The most 
vulnerable groups in the society tend to be the ones provided the least 
protection by existing social security programmes. 
BurgeUssn (iv19e9r0s)i tyin  ohfis G bhooakn a'A ghinttgp :i/n/ uWgessptearcne S.uogci.eetideus'. ghhas also stated 
that when an individual relinquishes gainful employment, the outcome could be 
of grave consequences to him especially when there was no preparation for it. It 
entails a reduction in livelihood. In that regard, retirement is seen as a tragic 
event for many people and it has great repercussions on most aspects of their 
lives especially the individuals happiness and security. 
Social insurance legislation in many countries according to ILO report 
(1997) does not stipulate that payment of an old-age pension requires cessation 
of gainful employment. The rationale is that the worker acquires the right to an 
old-age pension by paying contributions over a certain period of time and 
consequently, the pension has to be paid when the stipulated age has been 
reached, whether or not the insured person continues in gainful employment. In 
twenty-five (25) countries in Africa however, payment of benefits is subject to 
cessation from gainful activity. This condition ensures that there has in fact been 
a loss of income (Ejuba 1999). Enforcement of these provisions however, may 
be difficult 
Though they may not be linked in law, the two aspects cessation of 
occupational activity and entitlement remain complementary. The workers 
decision to claim a pension is influenced by the possibility of receiving pension 
which guarantees an adequate substitute income and on the other hand, the 
decision taken by the institution to retire him or her is easier when there is an 
old-age pension (lLO 1997). In this way, the setting of pensionable age is the 
key factor which most often influences actual retirement. 
Normal pensionable age is usually equal to or lower than 65 years. This 
age is moreover the upper limit laid down in ILO international labour standards 
which nevertheless, do provide for exceptions. On the whole, pensionable age is 
higher in industrial countries than in developing countries. 
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Opinions are however, divided on pensionable age for men and women. 
Whilst some countries give women the right to collect old age benefits at an 
earlier age than men, with a difference usually of five years, others have the 
same pensionable age. In most African countries such as Morocco, Guinea, 
Egypt, Gabon, Botswana and Ghana, retirement age is the same for both men 
and women whilst in other Western countries such as Argentina, Australia , 
Bolivia, Brazil , Italy etc .• the pensionable ages differ (source: US Social Security 
Adm. 1995). 
Retirement systems differ across nations. Institutional rules regarding 
benefit levels and manner in which these benefits are financed. differ 
tremendously across countries (Mitchell 1993). These structural differences 
imply that economic effects of retirement systems vary greatly from country to 
country 
The financial problems of retired workers are compounded by additional 
factors. One factor is the high cost of health care. and inflation which is 
especially devastating to pensioners since their income is fixed. In Ghana for 
example high rates of inflation over the years has greatly affected salaries and 
wages in the country and for that matter the pensioners' income. The great 
majority of the people find it difficult to meet their basic needs requirements such 
as nutrition. health. education. housing and water supply. This may be due to 
inadequate means to procure these needs. or to lack of access to the basic 
goods and services of the society (C. K. Brown, 1995). 
The real income needed to purchase goods and services is reduced and 
therefore a number of pensioners have no alternative than to be engaged in 
some form of employment. C. K. Brown (1995) confirms this in a survey he 
conducted on labour force participation. For the sample with an average age of 
68.4, the labUonuriv feorrcsei typa ortfic Gipahtaionna r ahtett pw:a//su ghisgph.a ceN.uegar.leyd hua.lgf h47% indicated 
that they had received some remuneration either in cash or in kind from an 
economic activity in which they were engaged during the past six months. 
Reasons given for their participation was the urgent need for money to support 
themselves children and spouses. 
Following from the above is the fact that though social security has been 
the major source of income for pensioners the need for other sources of income 
whether in cash or in-kind is a fact that cannot be overlooked . Myles (1979) also 
argues that only people in the top 25% of earnings brackets can provide for 
themselves in old age. He states further that in March 1984, 50.03% of people 
over 65 years were receiving Guaranteed Income Supplements. This includes 
pension payments to people who rely solely on old age pension for their income. 
The problem is noted by Zastrow (1993) that many elderly do not have 
investments or savings to support them in retirement and therefore social 
security has become the major source of income for the elderly. This poitlt is 
further stressed by Popple and Leighninger (1990) that most eldest in me 
American society rely on social security benefits as major source of income. For 
instance the level of benefits is low in many countries. This is partly due to the 
low incomes of the majority of the covered populations or the low ceiling levied 
for contributions, especially in countries where there are no mandatory 
complementary schemes (Ejuba, 1999). 
Ejuba argues further that although there are provisions for a periodic or 
automatic adjustment of pensions either with reference to increases in wages or 
the cost of living, their application is often more in theory than in practice in 
countries still facing liquidity problems and huge budget deficits. 
A studUy noifv peernssiitoyn  osfc hGehmaens ain  hAtftrpic:a// ufogr sinpsatacnec.eu gh.aesd suh.ogwhn that a good 
many formal social security systems of Sub-Saharan African have experienced 
serious credibility problems due to many factors , such as low benefit levels, long 
lead times to process claims and poor services. Credibil ity problems have 
affected all systems - provident fund or defined contributions (Barbone and 
Sanchez 1999). Provident fund 's problems derive from the fact that the benefits 
they provide correspond to contributions plus returns, so that all risks are shifted 
to the beneficiaries. In many other cases in addition, records could not even be 
located 
Barbone and Sanchez (1999) further argue that credibility problems of the 
defined benefit schemes are similar to those of the provident funds regarding 
services provided. However, since benefits are defined , the risks of poor 
performance, mismanagement of funds etc. are transferred to the government or 
to future generations. Serious governance problems underlie the loss in 
credibility. At the root of the poor governance is faulty institutional design. In 
many countries, the key problem has been the interference of the government in 
the Management of the funds. 
The World Bank advocates that developed countries should depend less 
on the public sector in respect of social security systems. World Bank report 
(1994) states that the experience of many countries with failed systems suggest 
that the best way for most countries to meet constructively the challenge of an 
aging world be through a multi-pillar system. These systems are: 
• A mandatory tax financial public pillar designed to alleviate poverty; 
• A mandatory funded , privately managed pillar (based on personal 
accounts or occupational plans) to handle people's savings; 
• A supplementary voluntary pillar (again based on personal savings and 
occupational plans) for people who want more protection. 
IncUomneiv oefr scoituyr soef  Gis hnaotn tah eh totnpl:y/ /ufagctsopr aacffee.cutingg.e pdous.igtivhe adjustment to 
retirement. Health is a matter of great importance and concern. As retired 
population grows older, good health becomes more problematic. Few survive 
beyond their seventies without deteriorating health. For most, such problems 
impose few restrictions upon mobility or achieving daily living goals. For others 
with more severe conditions, the role of patient tends to eclipse preferred 
retirement activities. (Hefferman, Ambrosino and Shuttlesworth (1988). 
In the case of Ghana however, comprehensive medical care is 
excluded from the scheme. There are no provisions for medical assistance for 
the aged and even under the invalidity benefit, the qualifying conditions are 
restricted in scope. 
1.6 Area of Study 
The study area for this research was Accra. Accra was chosen due to its 
high degree of heterogeneity among the working population which enriched the 
study with various views from respondents . Being the capital city of Ghana, it 
has the highest population and consequently had a high population of retired 
workers enlisted on the SSNIT scheme receiving retirement benefits, SSNIT 
being the focus of this study. Furthermore, SSNIT pensioners have formed an 
association in Accra which made reaching the respondents quite easy for 
purposes of data collection. 
1.7 Methodology 
The study had as its target group, retired workers receiving retirement 
benefits from SSNIT. Specifically, respondents were chosen from the Accra 
branch of the SSNIT pensioners association. The group consisted of civil 
servants, public servants, teachers and persons from the private sector for 
purposes of comparison and for fair representation of the pensioners. 
FoUr nthiev esrusrivteyy o, fp Gurhpoasnivae  hstatpm:p//liungg stpeachcneiq.uuge .ewdaus .gadhopted to select 
respondents in the various categories of jobs discussed earlier. The researcher 
with the assistance of an executive member of the association, randomly 
selected twenty-five (25) persons in each category of workers eariier mentioned. 
For this purpose, the researcher was present at the meetings of the 
association, and obtained a list of names of pensioners out of which the 
selection was randomly done by picking every second name on the list. Selected 
people were given questionnaires to fill. Interviews were adopted to supplement 
where necessary. 
Out of a total of one hundred and seventy (170) distributed, only fifty-five 
(55) were initially retrieved. More copies had to be re-printed and redistributed 
since most of the respondents had misplaced them and some were just unwilling 
to fill and return them 
The researcher therefore had to attend and sit in the meetings of the 
pensioners which was held once in a month to interview and fill the 
questionnaire herself. An average of seven (7) questionnaires were filled at a 
time (i.e. at one meeting) for four consecutive times bringing the number up to 
eighty-nine (89). The remaining eleven were received after persistent calls on a 
few respondents who were not willing to be interviewed but wanted to complete 
the questionnaire by themselves. 
1.8 Methods of Fieldwork 
Quantitative method of social research was the main method employed in 
the collection of data. The research instrument used in the quantitative method 
was a structured questionnaire. The questionnaire was designed to cover the 
major themes of the research objectives. The questions consisted mostly of 
open-ended questions and were mainly self-administered because majority of 
the respondeUnntsi vweerrsei tlyite oraft eG. hThains aa llhotwtped:/ /ruesgpsopnadcenet.su tgo. eandsuw.egrh the questions 
at their own pace and thus solicit all ideas held on the issues. 
Discussions were held with the executives of the target pensioners 
association, as a preliminary into the research problem from which pertinent 
questions were derived for the construction of the questionnaire. 
This method provided an in-depth knowledge into the SSNIT scheme for 
the researcher, and unfolded some problems faced by the pensioners as well as 
an enlightenment on the role played by the Pensioners Association. 
CHAPTER TUWniOve rsity of Ghana http://ugspace.ug.edu.gh
2.0 SOCIAL SECURITY IN GHANA 
This chapter discusses the traditional social security that existed before 
the institution of fonnal social insurance schemes, the concepts and principles of 
social insurance. and deals specifically with social security schemes with 
particular reference to social security in Ghana. It provides a historical overview 
and transition to the present pension scheme. It further discusses the SSNIT 
pension scheme in terms of coverage, benefits provided as well as financial 
management of the scheme. 
2.1 Traditional Social Security System 
In developing countries, the need for social security in its modern form 
has arisen mainly as a result of industrialisation, urbanisation and the weakening 
of structures which used to provide informal economic and social security on 
family basis. 
In Africa, the most common of the structures that performed these 
functions were the village, the clan, the extended family and the nuclear family. 
All these structures provided security for their members but one structure which 
covered an appreciable number of people, maintained intimate relations and 
provided most visible protection based on principles of solidarity was the 
extended family 
As was quite evident. a person staying in the family house was taken care 
of when he grew too old or too weak to work or if he became ill. Orphans in the 
family house became adopted children of the whole family . In short, the 
extended family system provided all kinds of benefits including those which in 
modern day parlance would be referred to as old age, invalidity, sickness benefit 
and maternity benefit inter alia. 
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With the introduction of machines which led to the Industrial Revolution in 
Europe, the competition between manufactured goods (which were less 
expensive and in most cases better) and similar products from villages resulted 
in people abandoning their family businesses for the cities in search of work for 
pay. 
With the influx of rural folks in the cities there was a gradual weakening of 
the economic base of the rural society and ultimately to the complete loss of 
contact between the urban migrant and his extended family. 
2.2 Transition to Modern Social Security 
The growth in the population of the urban jobless in England for instance 
led to the enactment of the poor laws in the 16th century. These laws sought to 
provide relief for the aged, sick and poor. Though these laws underwent various 
changes, it did not bring any significant relief to its beneficiaries. For instance, to 
qualify for a benefit one had to pass some needs test to show that he was really 
poor and had attempted but failed to contact relatives for help. This 
notwithstanding, the introduction of the Poor Laws was a significant step forward 
because, it was an acceptance of the principle that the state or society, in 
general, was ultimately responsible for the welfare of all citizens. 
A series of events occurred with the most important being the realization 
of the need for community action in the provision of protection against the 
consequences of illness, old age, death of the breadwinner and other 
misfortunes. This resulted in pressure being put on Governments to enact 
various laws to cater for the social security protection of workers and citizens in 
general. 
2.3 ModernU Dnaivye Srsoictyia ol fS Gehcuarnitay  http://ugspace.ug.edu.gh
Modern day social security began in Europe, Germany specifically under 
Chancellor Bismarck when he introduced a National Health Scheme in 1883. 
This was followed in subsequent years by other schemes introduced through 
statutes which provided other types of the social protection. 
The body of laws providing income protection against certain 
contingencies as stated in International Labour Organization (ILO) Convention 
102 of 1952 was for the first time collectively called Social Security by the United 
States of America when they enacted the Social Security Act 1935. 
The awareness leading to the emergence of social security in former 
British colonies in Africa was heightened after the attainment of independence 
when these countries became members of the United Nations and its affiliated 
bodies, specifically the ILO. As a result, most of these colonies in Africa 
established social security schemes not as a matter of conviction of their 
importance. Rather it was to go through the notions of satisfying the necessary 
conditions to enable them ratify the relevant conventions or at least to appear to 
have made the effort. 
2.3.1 Definition of Social Security 
The International Labour Organisation (ILO) in its convention 102 of 1952 
set the minimum standards for social security . This together with occupational 
safety could be used as a basis for the definition of social security . 
Social security may be defined as ~a series of public measures that 
society may take to protect its members against economic and social distress 
which '!lay otherwise be caused by substantial loss of income as a result of old 
age, invalidity, sickness, unemployment, employment injury, death of 
breadwinner, maternity, health (medical costs) and to help ease the financial 
burden on a family in the maintenance of children . ~ 
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Social security as defined above, clearly attempts to prevent destitution 
through public measures. There is nothing in the definition to suggest that it 
may be used by the individual or group as a means to enrich themselves. It is 
supposed to fonn only a floor of protection for the members of the scheme. 
Furthermore, it is not in competition with other pension schemes such as 
occupational or private pension schemes which may also provide some "end of 
service benefits· to the worker, but are considered supplementary to the basic 
social security scheme. 
Social security is thus designed as a means to restore normality when any 
one of these contingencies strike. It may thus provide benefits in cash (or in 
kind) to persons who suffer any such contingencies. 
The programmes to address these contingencies are usually grouped into 
Pension schemes (incorporating old age, invalidity and survivors pension), 
Health Schemes, Employment Injury Schemes, Unemployment benefit schemes 
and Family benefit schemes. 
2.4 Concept and Principles of Social Security 
Most of man's actions are dictated by his quest for security, for protection 
against the vagaries of a Mharsh world: In pre-historic times people were 
concerned with physical protection against brute forces of nature. As civilization 
progressed, the quest for security has become more sophisticated involving 
numerous social , political, international and economic techniques. For purposes 
of this study we shall concentrate on economic security with emphasis on social 
insurance as a technique for combating financial/economic insecurity. 
EconUomniicv esresciutryit yo fi sG ohnaen oaf  hthttep :u//nufuglsfilpleadc ene.uedgs. eodfu h.guhmans. Social 
security programmes have been designed to aid people in their quest for 
economic security. S. G. Sturmey as reported by Odoom (1998) defines 
economic security as "a state of mind or sense of well being by which an 
individual is relatively certain that he or she can satisfy the basic needs and 
wants both present and future .~ 
"Basic needs and wants~ refer to a person's desire for food , clothing, 
medical care and other necessities. The individual must have access to goods 
and services to attain economic security. Thus, economic security is closely 
linked to income maintenance. Where income is lost or significantly reduced, 
economic security is threatened. 
There are some major factors that cause economic insecurities which 
include among others; premature death of a breadwinner, old age, loss of 
income or reduction in income when a person retires , poor health - where 
serious illness or injury can cause loss of income for the disabled person. 
2.4.1 Principles of Social Insurance 
Social security programmes are part of the overall economic 
security programmes. Firstly, social security programmes are established 
by government statute and these generally provide individuals with cash 
payments that replace at least part of the income loss from old age, 
disability, death etc. 
Social insurance programmes are compulsory thereby providing a 
basic floor of income protection to the masses, which ensures that both 
healthy and unhealthy persons are covered. 
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People pass through several stages in the course of their lives. 
Years of economic activity are followed by retirement years during which 
advancing age make work more difficult and less attractive. Each 
individual can decide for himself how to divide consumption among these 
stages: saving in earlier years in order to be able to continue consuming 
once earnings ceased. However, the individual worker cannot be totally 
counted on to provide adequate savings for retirement because harsh 
economic conditions and high cost of living make it difficult if not 
impossible for workers to save towards retirement. 
The compulsory nature of social insurance schemes therefore 
ensures that. the future of the whole society is catered for. In a paper 
presented at a conference in Accra, Dr. Frank Odoom (1998) noted that 
there are certain factors existing in the society that account for this 
compulsory nature of social insurance programmes. These he identified 
as worker myopia, protection of the prudent. income redistribution amoMg 
others. 
Worker Myopia 
According to Dr. Odoom, there is the tendency in man to give liHle 
consideration to his future economic needs when making decisions about saving 
for retirement or for the future. This event occurs due to lack of foresight, 
economic hardships, low incomes etc. By the time they recognise that they may 
have a problem when they retire . it is usually too late and virtually impossible to 
accumulate some funds for the future . Compulsion therefore helps people set 
aside a part of their income when working so that they have adequate income 
when they retire. 
ProtectioUnn oivf tehres iPtyru odfe nGt hana http://ugspace.ug.edu.gh
On this factor. he noted that. the prudent thinks into the future and 
therefore sets aside some income. As a result. he needs to be protected from 
the myopia worker who has no foresight. The compulsory nature of the scheme 
therefore ensures that contributions are made across the board for both 
categories of workers 
Income Redistribution 
Social insurance schemes according to him are designed to favour those 
with lower lifetime earnings. Incomes or monies contributed into a fund by 
different categories of workers, that is. the high and low income groups, are 
redistributed much in favour of those in the low-income group. 
Social Adequacy 
An important principle of social insurance schemes is social adequacy 
which ensures that benefits paid provide a certain standard of living to all 
contributors. The purpose of this principle is to provide a minimum floor of 
income for all groups. This is a major difference between social insurance and 
private commercial insurance 
It is worth noting here that though social insurance principles stress on 
social adequacy against individual equity, there is a relationship between the 
two. In general the higher the worker's earnings, the greater the benefits. The 
relationship between the earnings and benefits is loose and disproportionate, 
but it nevertheless exists. 
Risk Pooling 
Social Insurance schemes are based on the principles of risk pooling and 
solidarity. The solidarity principle makes it possible to use a partial funding 
through the contract of generations. This contract of generations makes it 
possible for Utondaivye'sr wsiotryk eorf  toG fhinaanncae  hthttep :b/e/unegfsitsp aocf eth.ousge. ecudrure.ngthly on pension. 
When the current contributors eventually grow old, contributions of those then 
working would be used to finance their pensions. This mechanism is preferred 
by developing countries with young population because it can be used as an 
instrument for capital formation . 
2.4.2 Major Characteristics of Social Insurance Schemes 
There are three types of social insurance schemes as follows: 
Provident Fund Schemes. Employer Assisted Schemes and Social 
Security Schemes. The underlisted are major characteristics that govern 
social insurance schemes' 
It is established by law 
2. It is financed through employerfemployee contribution. 
It pays periodic (monthly) benefits. 
4. Benefits are related to insured earnings. 
5. There is no needs test i.e., it is universal 
6. Benefits are earned as a right by virtue of contributions. 
7. Reserves are judiciously invested. 
8 The scheme is self-sustaining. 
9. There is periodic adjustment of pensions to n~f1ect prevailing 
economic conditions. 
Social Security Schemes 
Social Insurance programmes are generally self-supporting, and financed 
entirely or in large part by special contributions from employers, employees or 
both as well as from investment incomes. These contributions are earmarked for 
special"funds out of which benefits are paid. In addition, the right to receive 
benefits is ordinarily either derived or linked to the recipient's past contributions 
or coverage under the programme. Most social insurance programmes are 
compulsoUryn wivithe rqsui~tlyi foyifn Gg choanndiati ohntst pa:n/d/u bgesnpeafitcse .uusgua.ellyd upr.egshcribed exactly in 
the statutes setting up the programmes. 
Provident Fund Schemes 
Provident funds are compulsory savings programmes in which 
contributions are regularly withheld from earnings of employees and are 
matched by contributions from employers. The joint contributions are credited 
to the account of each employee in a fund . The funds accrue interest and are 
later paid to the employee on retirement or upon the occurrence of certain 
contingencies that are covered under the fund 
2.5 Social Security in Ghana 
2.5.1 Historical Overview 
While Social security in Europe was a direct consequence of the 
Industrial Revolution, in Ghana. it was the result of a combination of 
factors: colonisation, industrialisation and urbanisation. (Adjei, 1997) 
Colonisation and the introduction of new methods of work 
transformed the traditional structures and working conditions resulting in 
the development of paid employment in the urban areas. As a result. the 
Ghanaian wage earner and his family were removed from their traditional 
environment into social contingencies similar to those which prevailed in 
the industrialised countries. 
The scheme's set up has been induced by the fact that on 
attainment of independence, Ghana embarked on a rapid economic 
development programme. The social security programme was introduced 
therefore to cover workers in the emerging industries to forestall the 
consequent social impact of the weakening traditional extended family 
system. 
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2.5.2 Pre-independence Social Security 
Prior to the establishment of a national social security system in 
Ghana, private schemes were in operation which catered for the security 
of various categories of workers. The Pension Ordinance of 1946 
established a non-contributory pension scheme for workers categorised 
as African Civil SeIVants and extended in a limited form to their widows 
and orphans. 
In 1955, by the Teachers' Pension Ordinance, certified teachers 
were made coverable under the 1946 ordinance. The senior members or 
lecturing staff of the country's premium university - then the University of 
Gold Coast also had a private superannuation scheme 
Meanwhile, some organisations in the private sector, especially the 
major foreign trading and commercial firms were operating 
superannuation, pension and provident fund schemes for their African 
senior employees. Ex-gratia awards were available for some workers 
who were not coverable under any of the above-named schemes 
2.5.3 Post-Independence Social Security 
With the ahainment of independence in 1957, Ghana embarked on 
intensive industrial and educational programme which ahracted a lot of 
people to the cities and urban areas in search of white-collar jobs. The 
security provided by the extended family system was eventually 
weakened leaving people in a state of sOCial incecurity. 
In 1961 therefore, a compulsory savings scheme was introduced in 
Ghana. The main financing feature of the scheme was the obligatory 
deductions made from the wages and salaries of aU workers in the formal 
sectoUr annidv eprasidit yin toof  aG fuhnadn. aIn  htettrpm:s// uofg bsepnaecfiets.. uwgo.erkdeurs. gwhere entitred to 
the principal amount saved plus interest on retirement. Due to the 
inefficient management of the scheme, particularly the system of refund, 
the scheme was abolished. 
2.5.4 The Social Security Provident Fund Scheme 
In 1965, a Parliamentary Act (Act 279) was passed which led to the 
seHing up of a Social Security Scheme to operate as a Provident Fund 
(PF) scheme for capital formation and to have a five-year gestation period 
after which it was to have been converted into a Pension scheme. The 
Provident Fund scheme was managed by the State Insurance Corporation 
under a Department of Pensions & National Insurance untit 1972 when a 
decree NRCD 127 was passed which established the Social Security and 
National Insurance Trust as an autonomous body corporate to administer 
the social security scheme 
The scheme as at that time embraced all workers in establishments 
which had five (5) or more workers. Effectively, the scheme covered the 
non-pensionable officers in the Civil Service, workers in parastatal , 
multinational companies and the fully-established private companies. 
Exemption was granted to members of the security services, foreigners in 
the diplomatic missions, senior members of the universities and research 
institutions. 
Benefits Provided 
Benefits provided under the Provident Fund (PF) scheme were 
superannuation, survivors, invalidity, emigration and unemployment. 
Over the years, the PF scheme proved totally inadequate in provid ing a 
reasonable basis for social security. The rate of interest payable on 
contributions was based on a level fixed by government through the 
comUpnuivlseorrys iptyur cohfa Gseh oafn gao vhetrtnpm:/e/untg sstpocakcse. .uTghe.e rdaute. gohf interest was far 
lower than the prevailing rate of inflation. resulting in a drastic erosion of 
the purchasing power of the benefits paid. The benefits paid which was a 
one-time lumpsum payment generally represented no more than a few 
months' earnings. Workers were only entitled to the principal amount 
saved plus interest on retirement. 
In effect, the PF scheme ceased to be an instrument or mechanism 
for providing the worker with adequate income protection. Steps were 
initiated in 1987 towards the conversion of the Provident Fund scheme 
into a Pension Scheme. It came into fruition in 1991 with the 
promulgation of the Social Security law (PNDCl247). 
2.6 THE SSNIT PENSION SCHEME 
2.6.1 Characteristics of the Scheme 
SSNIT operates a partially funded, defined benefit scheme. 
financed on a scaled premium basis. The contribution rate is 17.5% (Le. 
5% by employee and 12.5% by employer) of earnings for workers in 
formal employment, and 17.5% of declared income for the self-employed. 
Being an employment related social insurance scheme. eligibility 
for benefits is based on the length of period of contribution to the scheme 
during the time of employment or self-employment It is financed from 
employer/employee contributions. 
It is national in scope and coverage, thus, affording the contributing 
membership mobility of labour without loss of pension rights. 
It provides basic income security on retirement to its members. 
• There is a system for upward adjustment of penSions annually referred 
to as indexation as a result of inflation. Over the years, the following 
has bUeneniv peerrscietynt aogfe Gs husaenda in h itntdpe:x//iungg sppenascioen. upga.yemdeun.tgs:h 1991-17%, 
1992-21 %, 1993-86%, 1994-45%, 1995-10%, 1996-30%, 1997-25% 
and 1998· 14%. 
The scheme is a self·financing one where contributions received 
and the investment incomes are the only sources of finance to support the 
benefit the scheme provides • there are no other sources of income. 
Financial management of the funds will be discussed later in this paper. 
2.6.2 Objectives 
The major objectives of the scheme are as follows ' 
a) Pay benefits promptly. 
b) Review and improve benefits 
c) Increase the number of insured members. 
d) Improve fund management 
e) Increase awareness and acceptance of the Scheme. 
2.6.3 Functions 
To enable the scheme achieve its corporate objectives, it is 
committed to perlorming the following functions ' 
Collection of contributions 
Keeping records of its members. 
Managing the funds of the scheme. 
Processing and payment of benefits promptly 
The main function of the scheme is to collect contributions from 
workers (members of the scheme), keep proper records of the members, 
manage the funds/contributions collected by way of investments and 
finally. process and pay benefits to its members on their retirement, 
incapUacnitiavtieorns iotyr  doefa Gthh. aBny ath hist,t pth:/e/ usgchsepmaec efu.ungct.ieondsu .agsh an institution 
responsible for the provision of social protection for the working 
population. 
2.6.4 Coverage 
The principle of universal coverage by social security is a desirable 
g?al for all social security schemes. This is because the concept of social 
security draws its strength from notions of national solidarity. 
It pursues the goal of universal protection for the whole community 
on a uniform basis. The social security law therefore makes it compulsory 
for all Ghanaians in formal employment to contribute to the scheme, and 
this is enforced. Contributors to the old Provident Fund Scheme became 
members of the new scheme on its inception with full credits from the old 
scheme. Membership is however voluntary for those in the informal 
sector and coverage of this sector has not so far been really extensive. 
The subject of extending social security protection to the self-
employed or non-wage earners has become an important issue which has 
engaged increased attention 
2.6.5 Types of Benefits Provided 
Generally social security benefits may be classified into short-term 
or long term benefits. Short-term benefits as the name implies are 
normally paid for a limited duration. Such benefits include sickness and 
maternity cash benefits, medicare benefit among others. 
Long-term benefits include old age, invalidity survivors benefit and 
employment injury. These are paid in most cases on monthly basis until 
the death of the individual beneficiary. These long-term benefits are the 
type oUf nbiveneersfiti typ roovf idGehd abnya  thhett pp:e//nusgiosnp ascchee.mueg.. esdpuec.gifihcally old age 
retirement benefits, comprising lumpsum, full and reduced pension, 
invalidity pension. survivors benefits (currently paid as a lumpsum). It is 
anticipated that the Employment Injury Scheme would be introduced in 
the near future. 
(I) Old Age/Retirement Pension 
An old agefretirement pension is payable in full to a worker who 
retires after attaining the pensionable age of 60 and has made at least 
240 months contributions 
Workers may opt at the time of retirement to receive 25% of the 
amount of their old age benefits in the form of lumpsum payment, as well 
as monthly payments known as monthly pensions 
Provision has however been made for retirees who might have not 
attained age 60 but are 55 and above to collect their benefits if they so 
wish. This is known as reduced pension benefits. 
Computation of Old Age Pension 
With the old age benefits whether full or reduced, the computation 
is based on the worker's average insured earnings of his best three years' 
earnings. 
For a full pension. the amount payable is equivalent to 50% of the 
average earnings plus 0.125% for every additional month of contributions 
paid in excess of the first 240 months of contributions and up to a 
maximum pension equivalent to 80% of the average insured earnings. 
TUhnei vreedruscietyd  opef nGsihoan nisa c hotmtpp:u/t/eudg osnp athcee b.uasgis.e odfu th.ge hamount of a 
full pension. but is reduced to a percentage of the amounts of the full 
pension according to the age of the worker at the time of retirement as 
follows: 
From the above table, a pensioner who is 55 years takes 60% of a full 
pension whilst a fifty-seven-year old would take 75% of a full pension 
As discussed earlier, workers may opt to receive 25% of their total 
benefits as lumpsum payment. In this case, the amount of the 25% 
lumpsum conversion of an old age pension is equivalent to the present 
value (discounted at the prevailing real rate of interest of treasury bills) of 
an annuity certain payable for a period of 144 months (12 years) at a 
quarter of the value of the monthly pension. 
In the case of those who do not qualify for the old age pension, 
they receive lumpsum benefits. The benefit paid to them is equivalent to 
the contributions made on their behalf by their employers over the years, 
plus interest at half the treasury bill rate . 
(ii) Invalidity Benefits 
Invalidity benefits are payable to a worker who is below the 
pensionable age, has been declared to be permanently invalid and has 
made at least twelve (12) months of contributions in the last thirty-six (36) 
months preceding the onset of his predicament 
UBneinveefircsiaitriye so fo fG thhisa nbean heftittp m:/a/uy gaslspoa ocpet .autg t.heed tuim.geh of retirement 
to receive 25% of the amount of their invalidity pension in the form of 
lumpsumpaymenl 
The invalidity benefit is calculated in the same manner as the old-
age full pensions. The minimum amount of this pension is therefore 
equivalent to 50% of average best three years earnings, with the highest 
amount not exceeding 80% of the average earnings. 
(iii) Survivors Benefits 
Survivors benefit in the form of a lump sum payment is payable to 
nominated dependants of the family of a deceased person who at the time 
of his death was either a contributory member of the scheme, receiving a 
retirement pension, or receiving an invalidity pension 
For contributing members, the amount paid as lump sum benefit is 
equivalent to the present value of the monthly amount of the applicable 
pension for a period of 144 months. For the deceased pensioner or 
invalid, it is the unexpired period (up to age 72) of the pension that was 
being paid to the deceased pensioner or invalid. 
2.6.6 Claim Processing 
Claim processing is an important aspect of the functions of the 
scheme. At the point of retirement, death or incapacitation of a worker, the 
need arises for the beneficiary concerned to apply for a particular type of 
benefit as the situation or circumstance may demand. In respect of this 
study, retired workers apply for payment of old-age pension benefits 
ApUplniciavteiorns iftoyr  opfa Gymheannt ao fh ptetpn:s/i/oungs saprae cseu.bumgi.tteedd ut.og hthe district 
offices which in turn assemble claim documents in respect of applicants 
and forward them to the Benefits Department of the scheme for 
computation of the benefits. Computation of benefits has been fully 
computerised at the Benefits Department. As part of the processing 
procedure, a claimant's identification form (CIF) is completed by the 
applicant, and forwarded by the district office to the Records Department 
of the scheme for clearance. By this process. the Records Department 
confirms or otherwise, the membership, number and other vital 
information of the applicant after which the documents are forwarded to 
the Benefits Department where computation of financial statement is 
prepared for payment of the pension to be effected. 
Payments of pensions are effected through the banks. The scheme 
therefore ensures that all pensioners have or open bank accounts 
through which the monthly pensions would be effected. This system of 
payment reduces drastically if not totally eradicating the incidence of 
fraud and impersonation that may arise. 
At this point pensioners who opted for 25% lumpsum of their 
benefits have their monies paid to them through the bank as well. 
Thereafter, pensioners receive regular monthly pension payments. 
This year, management of the scheme provided a schedule 
indicating dates in each month when pension payments will be made. 
This enables the pensioners plan and know when to call at their banks for 
their pension payments. 
2.7 FINANCUIAnLiv MerAsNityA oGfE GMhEaNnTa  OhtFtp T:/H/uEg sSpCaHcEeM.uEg .edu.gh
To sustain the scheme and ensure consistent payment of benefits to its 
members. monies paid into the scheme in the fann of contributions are invested. 
Financial management is therefore very crucial in the operations of the scheme. 
For this reason, the Investment Department of SSNIT has the responsibility of 
managing the funds available to the scheme. 
The Investment Oepartment ensures long-term growth of the funds by 
investing in viable ventures, maintaining adequate liquidity of the fund and 
further ensuring that its investment activities contribute positively to the 
economic and social development of the country . 
The Financial Management of the scheme is guided by its Investment 
Policy. In addition. there is an investment committee which identifies, evaluates 
and recommends investment opportunities or projects for approval by the 
executive and Board before implementation. As a strategy, Management of the 
Scheme considers both the micro and macro aspects of individual investments 
and makes conscious efforts to maintain a balanced portfolio in terms of safety, 
returns, adequate liquidity, diversification, maintenance of asset value and 
sector developmental needs of the country 
The funds of the scheme are invested in safe and high yielding areas to 
ensure gro'Nth in real terms and pay meaningful benefits whilst ensuring the 
sustainability of the Scheme. The main areas of the scheme's investment 
portfolios are Government securities, equities, corporate loans, residential and 
commercial properties, institutional building, and fixed deposits with Commercial 
Banks 
The Trust is also mindful of the social needs of its members. as a result. 
some investments have been made in provision of health centres in Amasaman _ 
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The Trust is also mindful of the social needs of rts members, as a result, 
some investments have been made in provision of health centres in Amasarnan -
Accra, Enyan Abaasa _ Central Region, Larteh - Eastern Region, Akatsi - Volta 
Region, Domlnase • Ashanti Region. There is also the SSNIT Hospital and 
SSNIT Clinic in Accra and Tema to serve the general public. 
A number of public places of convenience have also been provided in 
Accra to serve the needs of the public. Furthermore, the scheme has instituted 
the provision of educational loans for students in tertiary institutions. 
2.7.1 Research Policies 
It is important that regular evaluation of the scheme the formulation 
of effective policies in the handling of issues that arise in the operation of 
the scheme It provides policy makers of the scheme with new 
knowledge which is integrated into the formulation and implementation of 
policies. 
2.7.2 Actuarial Valuation of the Scheme 
The scheme is subject to actuarial evaluation every year by the 
Actuarial Department of the scheme and once every three years by a 
Consulting Actuary. The third and latest Actuarial review of the pension 
scheme was undertaken in April 1996 with assistance of a former Deputy 
Chief Actuary of the social security administration of the United States. 
The review confirmed that the present rate of contributions is 
sufficient to support the present scale of benefits on the basis of the 
assumptions made and that the scheme would continue to accumulate 
substantial funds. In effect the review demonstrated that the scheme was 
financially and actuariallysound. 
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2.8 Conclusion 
The foregoing has described the SSNIT pension scheme and related 
matters. The next chapter will present an analysis of a survey conducted on the 
impact of the scheme on retired workers who receive monthly pension payment 
from the scheme. being one of the categories of beneficiaries of the scheme. 
CHAPTER TUHnRivEeErs ity of Ghana http://ugspace.ug.edu.gh
3.0 DATA ANALYSIS AND FINDINGS 
This chapter is on the analysis of data obtained from the field . The 
expected sample size as discussed in chapter one is hundred (100). 
3.1 Personal Information of Respondents 
The first part of the analysis looks at the socia-economic 
characteristics in terms of age, sex, marital status etc. of the subjects 
understudy. 
3.1.1 Age Distribution 
The age distribution of respondents is presented in the table one 
below: 
Table 1: AGE OF RESPONDENTS 
Age Distribution Frequency Percentage Cumulative % 
56 ·60 13 13.0 13.0 
61-65 47 47.0 60.0 
66-70 35 35.0 95.0 
71· 5.0 100 
The ages of respondents ranq,ed between 56 and 73 with a mean age of 
65.5 years . Out of the hundred respondents only 13 i.e. 13% were aged 60 
years and below. For the age range of 61-65 years, the number of respondents 
increased by 34% to 47. The number reduced to 35 and 5 for the-age range of 
' -66-70 and 11 and above respectively. 
3.1.2 RetiremeUnnt iIvne'ornsnitayt ioof"  Ghana http://ugspace.ug.edu.gh
The survey revealed that 22% of the respondents retired before age 60 
normally suggesting a voluntary retirement whilst 78% retired at age 60 and 
above. Table 2 below gives further details on whether respondents retired 
voluntarily or compulsory 
Table 2: VOLUNTARY OR COMPULSORY RETIREMENT 
TYPE IF REQUENCY IP ERCENTAGE CUM. PERC. 
Voluntary I 17 I 17.0 17.0 
Compulsory I 83 I 83 100 
Total I 100 I 100 
From the above table. only (17%) i.e. 17 respondents retired voluntarily 
whilst the remaining 83% retired compulsorily . It can be explained that just a few 
workers are willing to retire voluntarily usually for health or personal reasons. 
Most workers on the other hand . are either willing or are constrained financially 
to hold on to their job until they reach the retiring age or are asked to 
compulsorily retire from the services of their companies or institutions. 
Reasons offered by the 17% of respondents who retired voluntarily are as 
follows: 
% of the Total 
Health 5% 
In order to rest 3% 
Retrenchment/Liquidation of Compo 9% 
From the information a total of 8% of respondents had to retire either due 
to failing health. or to take a rest. The other 9% had to retire earlier because 
~ither theUir ncoivmeprasnitieys o wf eGreh laiqnuaid ahtettdp, :o//ru gthsepy awceere.u rget.reedncuh.gedh. This indicates 
that most workers will be willing to work to the retiring age barring any state of 
deteriorating health or setback from their employers or institutions. 
3.1.3 SexiMaritalStatus 
Fifty percent (50%) of the respondents were females, 48% were males 
whilst 2% failed to indicate their sex. On their marital status, 72% of the 
respondents were married, 6% single. 14% widowed and 8% divorced. 
Considering the single. widowed and divorced respondents (comprising 28% of 
the total respondents), the scheme may have a negative impact on them if they 
fall within the low pension income group. Th is is because they will solely be 
responsible for caring for themselves and thei r child ren at school (if any) and 
attending to other domestic/financial responsibilities . 
3.1.4 l ast Place of Employment/Position Held 
Out of the hundred respondents, 50% had retired from public institutionsl 
corporations (SOEs/parastatals) 40% from the Civil Service and 8% from private 
institutions, wh ilst 2% did not state their last place of employment. On positions 
held before retirement, 31 % of the respondents were holding managerial grades, 
40% in the middle level and 26% in the junior level, whilst 3% did not state their 
positions held. This information would be vital in explaining some basic issues 
on the disparity in pensions received by respondents later in the chapter. 
3.1 .5 Education 
Generally there is a perceived correlation between education and income 
levels therefore making the educational background of respondents important 
for the study. Oata gathered from the study indicated that 44% of respondents 
were in' the primarylmiddle category, 44% have had secondary education, 2% 
have had University education 6% have no formal education whilst 4% did not 
state their educational background. 
3.1.6 Dependants 
The issUuen iovfe drespiteyn doafn Gts hdaunrinag h ptotps:t /-/ruegtirsepmaecnet .luifeg,. eisd au .fgachtor that has 
relevance on the financial life of respondents. From the study, 19% indicated 
they had no dependants, 76% had a minimum of 2 and a maximum of 20 
dependants, while 5% did not indicate their status. Out of the 76 respondents 
who indicated they had dependants, 14 (modal frequency) have tw'o dependants 
each followed by 13 with 3 dependants each. This suggests that gradually the 
society is moving from large and extended family systems to small nuclear 
families where individuals cater for their spouses and children. In this regard 
less financial pressure would be placed on the pension income received by 
pensioners since a high rate of dependants implies increased expenditure 
On the other hand, though the extended family system is on the decline 
due to migration, education, urbanisation and other socio-economic factors the 
system still continues to impose responsibilities on a few. From the study, 11 % 
11% and 2% of respondents had 6, 8, and 20 dependants (each) respectively 
suggesting high rate of dependency. This could imply that the society still 
demands that retired workers cater for their extended family in the sense that 
even though retired , they still continue to be the breadwinners and providers for 
their extended families. Additionally, some people live in large households or 
family houses surrounded by financially dependant family members. The high 
level of dependants therefore creates an undue pressure on the pensioners, 
creating financial burdens in their post retirement lives. 
3.2 Analysis of the Scheme 
The Social Security Scheme enjoins workers and their employers to 
contribute 5% and 12.5% respectively to the pension fund during their working 
life, and after retirement, receive monthly pension payments. The minimum 
numbef of months one needs to contribute in order to qualify for pension is 180 
months though this need not be continuous, while the minimum qualifying age is 
55 years. On the benefits side, the minimum and maximum percentage penSion 
paid is 50% and 80% respectively of one's best three years' salary. 
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Pensioners receive different levels of pensions depending on one's salary 
level and number of months of contributions made to the fund . Table 3 below 
shows the levels of pensions paid to respondents for the first time after 
retirement. 
Table 3' FIRST PENSION PAYMENT 
AMOUNT FREQ. PERCENTAGE CUM. PERC. 
¢8,500 or Below 17 17.0 17.0 
¢B,500 - ¢50,000 52 52.0 69 
¢50,000 - ¢100.000 20 20.0 89.0 
¢100,000 - ¢200,000 5.0 94 
Above ¢200.000 6.0 100 
TOTAL 100 100.0 
From Table 3 above, 17 of the respondents representing 17% received less than 
¢8,500 which is the current basic pension payment as their first pension 
payment. Since the basic is ¢8,500, pensions that fall below that figure after 
calculation are automatically adjusted to ¢B,500. 
Fifty-two (52%) of the respondents received between ¢8,500 and ¢50,000 
as their first pension. 20% received between ¢50,OOO and ¢100,OOO. 5% 
received between ¢100,OOO and ¢20D,OOO whilst 6% received above ¢200,OOD. 
From the table it is evident that the bulk of pensioners (52%) received between 
¢B,500 and ¢50,OOO as their first pension payment 
There was a percentage reduction of 32 for the next range of pension 
payment, i.e. between ¢50,OOO and ¢100,OOO, falling drastically in the next 
range of bet\Yeen ¢100.000 - ¢200,OOO to 5%. It is observed that quite a large 
percentage (17%) received the basic pension payment of ¢8,500 with a 
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cumulative percentage of 69 of the respondents receiving below ¢50,OOO cedis 
as their first pension payment. The reason for this low pension can be linked 
directly to the low salary levels since contributions to the scheme is based on 
17.5% of salaries 
3.2,1 First/Present Pension Payment 
A cross tabulation of the first pension received and the current pension 
received by respondents is provided in table 4 below. 
Table 4: FIRST PENSION PAYMENT & CURRENT PENSION PAYMENT 
Amount ¢8,5000r ¢8,500- ¢50,OOO- ¢100,OOO - Above Total 
below ¢50,OOO ¢100,OOO ¢200,000 ¢200,OOO 
¢8500 14 2 17 
¢8500 - ¢50,OOO 26 22 52 
¢50,000 - ¢100,OOO 20 
¢100,000 - ¢200,OOO 
Above¢200,OOO 
Total 40 36 13 100 
Out of the 17 respondents who received ¢8,500 as their first pension, only 
one is still receiving that amount as monthly pension. 14 out of the 17 have 
moved to the next category of between ¢6,500 and ¢50,OOO, whilst 2% are 
taking above ¢50,OOO. Out of the 52 respondents who received betvoJeen ¢8,SOO 
and ¢50,QOO, 26 are still within the range, whilst 22 have moved to the next 
category with 3 people taking between ¢100,OOO - ¢200,OOO, and 1 person 
taking above ¢200,OOO. This pattern follows for the other categories. 
From the above, it can be seen that monthly income of pensioners are not 
fixed but increases with time. this is because the scheme has put in place a 
mechanisUmn wivheresbityy p oefn sGiohnas noaf r ehttitrepd: //wuogrkseprsa caere. uingc.reedasue.dg hon yearly basis. 
The scheme has a system of indexation i.e. a factor by which pension incomes 
are indexed yearty. This factor takes into consideration the inflation rate existing 
in a particular year. As disclosed in the earlier chapter pensions have been 
indexed by the following percentage: 17%, 21%, 86%, 45%,10%,30%,25% and 
14% between 1992 -1999. 
3.2.2 Satisfaction with pensions paid 
Despite the above-mentioned increments in the pensions paid over the 
years. the fact still remains that respondents are still not satisfied with the 
amount of pensions received. This is evident in table 5 below that sought to find 
out whether or not respondents were satisfied with the amount of pensions 
received. 
TableS: SATISFACTION WITH THE PENSIONS PAID 
RESPONSES FREQUENCY PERCENTAGE CUM. PERC. 
YES 5.0 5.0 
NO 94 94.0 99.0 
NOT STATED 1.0 100.0 
TOTAL 100 100.0 
Out of the 100 respondents , 94 indicated they were not satisfied with the 
amount of pensions received , 5% indicated they were satisfied while one failed 
to indicate his/her position Reasons offered by respondents for their positions 
are indicated below· 
Table 6: REASONS FOR POSITION 
REASON University of GhaFnRaE hQtUtpE:N//CuYg spPaEcRe.CuEgN.eTdAuG.Eg h CUM. PERC. 
Amount woefully inadequate in 62 62.0 62.0 
view of living conditions 
Commitments greater than 33 33.0 95.0 
ension received 
Satisfied with pension received 3.0 98 
Not stated 2.0 100 
TOTAL 100 100 
Sixty two percent (62%) of respondents agreed that the amount paid to 
them as pension is woefully inadequate in view of the high cost of living. 33% 
responded that their financial commitments were greater than the pension 
received. In effect the income received by respondents is not adequate to meet 
Iheir financial commitments and therefore does not replace their lost income. 
For many retirees, income resources are often reduced drastically upon 
retirement, and meeting basic survival needs is often difficult (Zastrow 1993). 
This confirms a report by Ejuba (1999) that the level of benefits is low in many 
African countries. This is partly due to the low incomes of the majority of the 
covered population or the low ceiling levied for contributions especially in 
countries where there are no mandatory schemes 
Low salaries of workers thus affecting pensions paid are not peculiar to 
particular categories of institutions, but runs across institutions. This was 
revealed in the study, as data collected indicated that out of the 50 respondents 
who retired from public institutions and corporations, 24 of them receiv~d 
between ¢8,500 - ¢50,000 as their first pension payment. Similarly, out of the 40 
respondents who retired from the civil Service, 20 recorded the same level of 
pension (¢8.500 - ¢50,000) as their first pension payment. The same was 
identified for the private institution where out of 8 respondents , 6 fell Into the 
same category, proving the fact that salaries are generally low and thus affec~ 
pension payments on retirement. 
3.2.3 The Economy and the Scheme 
EaUrlineriv fienrdsinitgys  oinf  tGhish achnaap thetrt pha:/v/ue gcsonpfairmcee.du tgh.aet dthue. glehvels of pensions 
paid are woefully inadequate in view of high cost of living due to inflation. Also, 
financial commitments of pensioners are greater than pensions received as 
indicated by 62% and 33% of respondents respectively in table 6 above. 
The low pension received by pensioners is made worse due to inflation, 
high cost of living and other economic and non-economic factors in the society 
thus aggravating the already bad financial standing of the retired worker 
Over the years, the rates of inflation have been generally high. The 
annual rate of inflation more than doubled in 1993. End of year inflation 
increased from 13.3% in 1992 to 27.7% in 1993. compared to 8% target set by 
the government which was later revised upwards to 20%. (Source ISSER 1993) 
In 1995, the rate was 70% and in 1996 it was 42%. Factors behind the high 
level of inflation in the economy include: 
Increases in petroleum prices that affect inflation through direct impact on 
the consumer price index. It also has an indirectly impact on a wide range 
of commodities through transportation costs 
Depreciation of the value of the cedi. 
Decline in agricultural output 
Inflation has a cyclical negative effect on the economy. It generally 
affects the prices of goods and services in the society thus reducing real 
incomes of all categories of persons in the society, resulting in a high cost of 
living. Basic utility services such as water and electricity are all affected leading 
to high service bills thereby making it difficult for the pensioner to adjust to his 
new life with his penSion income. 
Information obtained from -The State of the Ghanaian Economy in 1993-
(ISSER 1U99n4iv) erervseiatyle do ft hGath tahne ale hvettl po:f/ /puegr scpapaictae r.euagl .eindcoum.geh wh ich measures 
the standard of living of the Ghanaian was below the 1980 levels in 1991 . In 
view of the above, respondents (45%) have called for a review of the benefits to 
"reflect the current cost of living." 
Apart from the above economic factors impinging on the pensioners 
meagre income, other non-economic factors also affect the pensioner's 
financial life. In most institutions, workers have access to some services and 
benefits such as use of official vehicles, free or subsidized transportation. free or 
highly subsidized medical care for themselves and dependants, payment 
of utility bills and subsidized , or free accommodation in official bungalows. 
As workers retire all such services and benefits cease, pensioners 
therefore have to pay for or provide their own services thereby affecting their 
financial life. No wonder 58% of them suggested free medical care as an 
additional benefit to be provided by the scheme, and a total of 11% proposed 
that pensioners be allowed to use SSNIT vehicles for free while 2% and 9% 
recommended the provision of transport and rent subsidies respectively . 
Furthermore, they need to purchase fuel (or their vehicles (if they have) or 
pay for transportation fares and other bills, and also pay for their accommoda-
tion if they do not own houses. 
3.2.4 Option for 25% lumpsum of Benefits 
An aspect of the scheme provides the opportunity for pensioners to take 
25% of their benefits as lumpsum and take the rest as monthly pension, By this 
arrangement. the monthly pension received is reduced by that lumpsum factor. 
This facility was provided by the scheme to enable pensioners receive the 25% 
of their benefits in advance (if they so wish) to meet urgent financial 
commitments 
Ta~~~; and 8 below show the options of respondents and the reasons for their 
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Tables 7 ' OPTION FOR 25% LUMPSUM 
RESPONSE FREQUENCY PERCENTAGE CUM. PERC. 
59.0 
98.0 
100 
TableS: REASONS FOR OPTION 
REASON FREQUENCY PERCENTAGE CUM. PERC. 
Meet some financial 20 20.0 20.0 
commitments 
Get some money for use 31 31.0 51 .0 
Not aware of it 12 12.0 63.0 
No reason 16 16.0 79.0 
25% insignificant for any 14.0 93.0 
project 
Complete Building 7.0 100 
TOTAL 100 100 
Fr om table 7, 59% opted for 25% lumpsum of their benefits while 39% opted 
against it. Reasons for their option is provided in table 8 
The study furthermore uncovered that option for the 25% lumpsum by 
pensioners did not depend on the expected amount to be received. for the 
various.l evels of pensions paid out. about half the number of pensioners who fell 
in each level, opted for the facility. 12 respondents out of 17 who received an 
amount of ¢8,500 and below as their first pension payment, opted for the facility. 
23 out of 52 respondents who received between ¢8,500 and ¢50,000 also did. 
14 out of 20 respondents who received between ¢50,OOO and ¢100,OOO, 
respondents who received between ¢100,OOO - ¢200,OOO as well as 5 out of the 
6 respondUenntisv ewrhsoi trye coefi vGedh aabnoav eh t¢t2p0:0/,/OuOgOs paas cthee.uir gfi.restd pue.ngshion all opted for 
the facility These figures revealed that irrespective of the expected amount of 
pension to be received, most pensioners were will ing to take part of their 
benefits in advance for one reason or the other. 
It is clear from the study that the option for 25% of one's benefit is a 
welcome news for retired workers because most workers retire without any 
financial benefits from their employers, and also for the fact that Staff 
Occupational Schemes are not popular in the country. Most workers therefore 
depend almost entirely upon social security benefits from the scheme. 
3.2.5 Other Sources of Income 
In view of the fact that pensions paid are not adequate to cater for all the 
needs of pensioners, some pensioners (either before or after retirement) initiate 
some activity to ensure them additional income. Quite remarkably, the study 
revealed that 36% of pensioners had other sources of income. These sources 
are as follows: assistance from wife and children (4%), tailoring (5%), 
employment/petty business (13%), farming (8), investment/shares (6%) 
The above, information indicates that 6% of the total respondents have 
invested in shares and other forms of stocks against the future . This is an area 
where prospective pensioners could be counseled to invest in for the future. 
Such investments can be done during the working lifetime which can serve as a 
form of savings for the future. Regrettably however, it formed just a small 
percentage of sources of income for pensioners as revealed by this study. This 
may be due to the fact that salaries are low and therefore. workers cannot save 
for such purposes or information on such investment is not available. For such 
category of pensioners therefore, the monthly pension received is their only 
source of income. although it is inadequate 
There is the need therefore to encourage and educate workers to invest 
in such aUrenaisv eorrs ittayk eo fi nGsuhraanncae  hptotplic:/ie/usg fsopr athceeir. uogw.ne dfuut.ugrhe since pension 
benefits can only be considered as basic income necessitating the need for 
other sources of income as a supplement. 
3.2.6 Post-retirement Employment 
Post-retirement employment or other forms of economic activity ostensibly 
to supplement incomes represents an important issue in the study. 14% of 
respondents indicated they were in some form of employment like petty trading, 
farming , tailoring for income generation. while 86% were not in any form of 
employment. The main reason for participation in employment for the aged is 
the need for persons in this age group to receive income on which to live (C. K 
Brown 1995). Nevertheless, there may be other reasons for their participation 
in economic activities such as occupying themselves or the need for maintaining 
body fitness. However, the most compelling reason for these post-retirement 
economic activities is the need to hedge income against real income losses so 
as to be able to maintain a minimum standard of living. Following from this is the 
fact that the scheme is not adequately replacing the lost income of pensioners 
for which reason they need to hold on to some kind of job as a supplement. 
According to Lord Beveridge as reported by Atchley (1988), the purpose of 
social security is to guarantee each person a minimum livelihood through better 
distribution of income 
3.3 Evaluation of the Scheme 
Certain aspects of the scheme such as time spent in processing claims, 
pensioners' satisfaction with the services received in the course of processing 
their claims, regular and timely payment of pensions monthly, are among factors 
that contribute to the perception of the scheme by respondents 
Table 9 below describes responses from the respondents on time laken in 
processing their pension claims 
Table 9: CLAIM PROCESSING PERIOD 
University ofF GREhQaUnEaN hCtYtp ://uPEgRspCaEcNeT.AuGgE.e duC.UgMh . PERC. PERIOD 
Up to six weeks 5.0 5.0 
Two months 11 11 .0 16.0 
Three months 44 44.0 60.0 
Three to six months 11 11 .0 71 .0 
Above six months 29 29.0 100 
TOTAL 100 100 
From the table onty 5% of respondents had their cla ims processed before 
six weeks. 11% of pensioners had their claims processed within two months. 
The mode of 44% was respondents whose claims/benefits were processed up to 
three months. 11% of the claims were processed between 3 and 6 months whilst 
29% of the respondents had theirs processed beyond six months. 
From the above information, three months is seen as the modal 
processing period. However, processing figures for April , 1999 obtained at the 
Claims Unit of the scheme compared with the above stated figures, revealed a 
rather shorter processing time. Figures obtained gave the average processing 
period as 38 days, with 68 and 17 days being the maximum and minimum 
processing periods respectively. It can be said therefore that, an improvement 
has been made over the years as most of the respondents (over 79%) retired 
before 1997. 
Factors that contributed to delayed claims were tdentified to be unreliable 
records , non-endorsemenVimproper completion of claim documents and 
replacement of student loan guarantors among others. 
Matching Ihe amount of pensions received to the processing period , it 
was seen that the pattern was evenly distributed among the various levels of 
pension paid. That is to say, the processing period did not depend on the 
expected pension to be paid, Le. whether high or low level of pension. Table 
10 Below provides a clear picture. 
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Table 10: Claim Processing Period by First Pension Payment 
Period ¢8.500 Above Above Above Above Total 
or below ¢8,500· ¢50,000· ¢100,000 · ¢200,000 
t50,000 :tioo,oOO '¢200,000 
Up to six weeks 3 1 
Two months 11 
Three months 18 14 
Three to six months 11 
Above six months 17 29 
Total 17 52 20 100 
3.3.2 Satisfaction with the processing of claims 
Though the main interest of pensioners is the pension income. other 
factors that go into the processing of their claims mean much to them. For this 
reason, over half of the respondents 52% registered their satisfaction with 
processing of their claims while 48% registered dissatisfaction with the 
processing. Reasons provided for their dissatisfaction were long processing 
period 280/0, and poor system of application (20%). Of the 28 who complained of 
long processing period , 16 (more than half) received between ¢8,500 and 
¢50,OOO as pension. It can be deduced from the above information that for 
those in the low income group, waiting for three months for their pension would 
seem unreasonable. The reason apparently being that their financial positions 
even before retirement are precarious. hence being without any income for three 
months would be very unbearable 
Discussions held with officials of the scheme and a study of the 
procedures for claim processing indicate that, prospective retirees are expected 
to lodge their claim with the scheme three months prior to retirement. This is to 
enable claims to be processed before pensioners retire in order not to create a 
gap between normal employment income and pension income. and additionally 
to serve as Ua nreivpelarcseimtye notf  oGf hthaen alo sht titnpc:o//mueg.s Hpoawceev.uerg, .iet dwua.sg hdeduced that 
many wor1cers do not comply with this requirement as they wait till they see 
themselves out of their establishments before they proceed to process their 
pension benefits 
On the other hand, the 48% of respondents registered their satisfaction 
with the period of processing their claim. 11 % said that their claims were 
processed within a short time, 6% said processing was smooth and 22% 
encountered no problems at aU. It is worth noting here that the claim-processing 
period is a relative issue. Whilst some may consider three months of waiting for 
their benefits a long period of time because of economic circumstances, others 
see it as a normal phenomenon in view of probably earlier experiences 
elsewhere or what they consider to be the normal situation. 
The table below provides information on the processing period vis-a-vis 
the responses of respondents 
Table 11: PROCESSING PERIOD OF CLAIMS BY SATISFACTION OF 
RESPONDENTS 
PERIOD YES NO TOTAL 
Up to six weeks 5 
Two Months 11 
Three Months 34 10 44 
Three to Six Months 11 11 
Above Six months 24 29 
Total 52 48 100 
Out of the 5 respondents whose claims were processed by the sixth week, 
4 expressed their satisfaction while one (1) was not satisfied with the 
processing. Nine out of the eleven (11) whose claims were processed within two 
months were satisfied and 34 out of 44 pensioners whose claims were 
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processed within 3 months registered their satisfaction 
On the extreme end of the spectrum were respondents whose claims took 
over 6 months to process. Obviously, such claimants or pensioners for that 
maHer, will not be pleased with the scheme. This is shown by the fact that 24 out 
of the 29 respondents who fell within this category registered their displeasure. 
However, 5 respondents in this category were satisfied. 
From the above results, it can be said that perception or impressions 
about the scheme as far as period of claims processing is concerned is relative , 
finding its roots partly in their own experiences with the scheme and partly in 
other economic factors. As a confirmation of the above, the study revealed that 
42 out of the 78 respondents who retired at age 60 and above were satisfied 
with the processing of their claims as against 36. On the other hand, 10 out of 
the 22 respondents who retired before age 60, were satisfied whilst the 12 were 
not 
It can be concluded that whichever approach is used in this analysis, 
respondents will differ in their views depending on their own assessment and 
expenences. 
3.3.2 Regular and Timely Payment of Pensions 
Timely and regular payment of subsequent pensions after the initial claim 
processes is an important issue for pensioners. Just as workers expect to 
receive their salaries on specific dates, pensioners also expect to receive their 
pension incomes regularly and timely every month. These factors provide more 
insight about the perceptions of the scheme by pensioners. 
Tables 12 and 13 provides the responses obtained from respondents on 
whether their pensions were regular and timely. 
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Table 12· REGULARITY OF PENSION PAYMENTS 
I RESPONSE I FREQUENCY PERCENTAGE CUM.PERC. 
I YES 97 97.0 97.0 
I 
I NO 3 3.0 100.0 
I 
I TOTAL 100 100.0 
I 
Table 13: PROMPTNESS OF PENSION PAYMENTS 
I RESPONSE FREQUENCY PERCENTAGE I CUM. PERC. 
rYES 97 97.0 97.0 I 
INO 3 3.0 r 100.0 
I TOTAL 100 100.0 1 
In both cases, 97% of respondents pointed out that their pension 
payments were regular and were paid on time. That is to say that once the initial 
payment (though delayed) was effected, subsequent payments were not 
delayed. Assessing the scheme from this response, it can be deduced that, the 
scheme has put systems in place that ensures that pensioners received their 
incomes regularly i.e. monthly and also ensures that these payments are made 
in time. If pensions paid were not regular and on time, the plight of the 
pensioner would have been aggravated due to the afore-mentioned economic 
factors. To circumvent this problem, from the beginning of this year (1999), the 
scheme has provided specific dates in each month when pensioners will be 
expected to visit their banks for their pension payments 
For this reason, accounts of pensioners are credited with their 
pensions Ubyn itvhee rsthiitryd  oTfh Gurhsdaanya o hf tetpve:/r/yu gmsopnathc. eT.hueg .secdhuem.geh is working 
closely with the banks to ensure that this directive is adhered to . On the 
service charge levied on the pensioners by the banks, discussions are being 
held with them (banks) and hopefully an agreement would be reached to 
enable the banks waive the service charge or reduce it. (Culled from SSNIT 
NewsletterVol.3 NO. 7 Jan- Mar 1999). 
In the case of minimum deposit required by the banks, official sources 
indicate that consultations are yet to be held on how best the pensioners 
could be assisted. This arrangement is seen as a step forward by the scheme 
to satisfy its penSioners. It could therefore be stated that the 
perception/impressions of the pensioners as far as monthly payments of 
pensions are concerned is very positive since scheme is meeting the 
expectations of pensioners by ensuring that they are paid regularly and on 
time. 
3.3.4 Respondents Rating of the Scheme 
The study sought to find out pensioners overall assessment of the 
scheme by asking them to rate the scheme from suggested answers of good. 
fair and poor. Responses obtained are indicated below in table 14. 
Table 14: RATING OF THE SCHEME 
RATING FREQUENCY PERCENTAGE CUM PERC. 
GOOD 25 25.0 25.0 
FAIR 64 64.0 89.0 
POOR 11 11.0 100 
TOTAL 100 100.0 
Twenty-five (25%) of the respondents rated the scheme as good, 64% 
rated it as fair while 11 % stated it was poor. A total of 89 respondents in 
effect agreed that the scheme was satisfactory (25% & 64%), since it 
provides soUmne ivfoermrs iotyf  ioncf oGmhe afnora t hhetmtp :t/o/ ulgivsep oanc. eT.huisg .ceodnufir.mghs the basic 
principles of social security that seeks to provide a minimum floor of income 
protection for contributors in the event of any contingency. It ensures that 
benefits paid provide a certain standard of living for contributors, thus 
attesting to Jin Kral's (1995) statement that the basic system of pension 
insurance is capable of ensuring a level of pension which represents only a 
limited replacement of the income of the insured worker. 
3.4 Perception of the scheme 
Perception and views held by pensioners in particular and workers in 
general is an important ingredient needed by management of the scheme to 
assist them in their attempt to review the scheme and make it efficient. It 
actually discloses the expectations of beneficiaries. It is therefore necessary 
to find out the general views of pensioners. Data gathered from the study on 
views of respondents is presented in table 15 below 
Table 15: VIEWS ON THE SCHEME 
VIEWS FREQUENC PERCENTAG CUM. 
Y E PER. 
Good, gives basic assistance to 38 38.0 38.0 
I pensioners 
Inadequate pension, not helping 40 40.0 78.0 
I pensioners with low salaries 
The scheme should assist 3.0 81 .0 
I pensionerswilhloans 
Government should contribute to 2.0 83.0 
the scheme from taxes for pension 
ipa)'l11ents 
Scheme should benefit only 3.0 86.0 
contributors. 
The scheme needs to be improved 5.0 91 .0 
Too·much Government interference 3.0 94.0 
NotState<l 6.0 100.0 
TOTAL 100 100 
Much as respondents agreed that the scheme was satisfactory, 
providing aU bnaisviec rinscitoym oef  lGevhela fnoar  phetntpsi:o/n/uegrss, psaigchet .wuags. endout .logsht of the fact 
that the pensions paid out were inadequate in view of current socia-economic 
factors that has led to high living expenses as indicated earlier in the chapter. 
From the table , 38% of respondents agreed that the scheme was 
satisfactory as it provided a basic income assistance to pensioners, but 40% 
felt that the pensions paid were not adequate and therefore not of great help 
particularly to pensioners with low salaries. It can therefore be inferred that 
pensioners greatly depend on income received from the scheme for their 
livelihood and therefore desire for its review as evidenced by the 5% of 
respondents who indicated that the scheme needs to be improved 
Other views expressed by respondents (3%) are to the effect that the 
scheme should assist pensioners with loans whilst another 3% said the 
scheme should benefit only contributors to the scheme. 2% said the 
Government should contribute to the scheme from taxes paid by workers. 3% 
said there is too much interference by the government while 6% failed to 
state their views. This confirms a report of a research conducted by Barbone 
and Sanchez (1999) on governance of pension schemes in Africa that one of 
the key problems in that region has been the interference of the government 
in the Management of the scheme. 
The view expressed by 3% of the respondents to the effect that SSNIT 
should assist with loans can be seen as rather far-fetched and not in 
consonance with the objectives for establishing pension schemes for workers. 
Social security schemes as previously discussed are established to replace 
lost income of workers or to provide a basic assistance for them. This is done 
by either providing a lumpsum benefit in terms of Provident Fund schemes or 
by the payment of monthly installments of one's benefits over a period of 
time, usually till the benefiCiary dies. Granting of loans to pensioners will 
therefore render the objectives futile . 
FurUthnerimveorres,i tcyo onsf idGehrinagn ath eh tltepv:e/l/su gofs ppeancseio.nusg .peadidu o.guht. it would be 
practically impossible to deduct some percentage of money out of the 
pensioners' meagre income to service loans collected. 
3.5 Provision of Other Benefits apart from Monthly Pension 
In view of the low pensions paid to pensioners, there seems to be the 
need tor ~extra· benefits either in cash or in-kind to supplement the 
pensioners income. Table 16 below reveals recommendations given by 
respondents as to some benefits that would be of assistance to them. 
Table 16· PROVISION OF OTHER BENEFITS 
BENEFIT FREQUENCY PERCENTAGE CUM. PERC. 
Free medical care 58 58.0 58.0 
Use of SSNIT vehicles 2.0 60.0 
Christmas bonus 6.0 66.0 
Transport! Rent subsidy 9.0 75.0 
Relaxation/social centres 2.0 77.0 
Help workers own houses 2.0 79.0 
Agreed, but did not state 21 21.0 100.0 
TOTAL 100 100.0 
As indicated in the table, over half of the respondents (56%) 
suggested nee medical care as one major benefit to be provided by the 
scheme. As many as 21% also agreed on the need for the provision of some 
other benefit but failed to state particularly what kind of benefit. This again 
buHresses the fact that pensions paid are low and therefore the need for 
some additional benefit as a supplement. The next highest frequency of 9% 
was posted by respondents who felt the need for pensioners to be provided 
with subsidies for rent and transport. In addition to this, another 2% of the 
respondents stated the need for the scheme to help workers own houses 
LackU onfi vaeccrosmitym oodfa Gtiohna ins aa  hvettrpy :i/m/upgosrtpanatc iess.uueg .ien dthue. gchountry now 
As compared to other countries particularly the advanced ones, there seems 
to be no public policy or arrangement for mortgage facilities to enable 
workers own houses in this country, albeit similar facilities exist for a limited 
number of institutions who have the ability to assist their employees to own 
houses. In some countries, the government provides the needed elements 
that enable workers (all categories) to at least rent and consequently own 
houses/flats. Thus accommodation during retirement poses no problem. 
On the Ghanaian scene however, owning a house is an expensIve 
venture in view of the rising cost of land and building materials. Besides, the 
government is not much involved in the construction of houses or flats for 
workers. Houses are developed mainly by self-help approach. Just a small 
percentage of workers with high levels of income are able to put up houses 
during their working life in view of the cost involved. Nevertheless, few others 
in the low-income group are able to build their own houses over a period of 
time. SSNIT as an institution, has also been involved in the putting up of flats 
for workers for renting. A number of workers flats have been constructed in all 
the Regional Capitals for workers for renting, thus solving partly the 
accommodation problem facing workers in the country . 
However, in view of Ihe high default rate in the payment of rent, and 
the need to recoup monies invested in the buildings, the attention has now 
turned to outright sale of the flats instead of renting. [ncidentally however, 
the poor workers for whom the flats were constructed are unable to purchase 
these flats only to be owned by non-contributory businessmen who are able 
to afford and in turn rent to workers 
. In effect therefore, workers are unable to own the houses and are 
therefore faced with the problem of accommodation after retirement 
particularly those who might have lived in government bungalows and 
quarters while in public service. 
As noted earlier, 58% advocated that there should be free medical 
care. This Uis nai vveerrys siteyr ioouf sG ihssaunea.  hMtetpd:ic//aureg sisp aa cmea.tutegr .oefd gura.gvhe concem to 
the society not to mention the aged. Aging as a phenomenon, carries with it 
an attendant deteriorating health. Medicare for the aged is therefore an 
expensive affair not to mention the cash and carry system introduced a few 
years back. Though the Government has proposed free medical care for the 
aged, in practice it does not exist. Th is therefore makes the pensioner worse 
off if they have to spend their meagre pension on medical care. 
As the retired population grows older, good health becomes more 
imperative. Few survive beyond their seventies without some debil itating 
health problems such as arthritis, high blood pressure poor digestion or 
related problems. (Herffernan, Ambrosino and Shuttlesworth 1988). For 
most. such problems impose restrictions on mobility or achieving daily goals 
For the retiree in poor health, health-related problems may diminish the 
satisfaction desirable in the world away from work 
In the advanced countries as reported by Herffernan, Ambrosino and 
Shuttleworth (1968). health care resources are provided primarily through 
medicare and Medicaid. Medicare according to them is a government health 
insurance programme designed to pay for hospital care and related expenses 
for pensioners over 65 years 
It is for this reason that most pensioners would want the scheme to 
provide as an additional benefit. free medical care. In this regard , the pension 
scheme has initiated the introduction of health insurance scheme that will 
embrace all who contribute to it. This is a contributory scheme that caters for 
the health needs of the contributor. Currently results are being awaited on a 
pilot scheme on the National Health Insurance Scheme being undertaken in 
the Eastern Region. It is hoped that results will give clear indications to what 
direction and what form the Health Insurance Scheme will take and address 
the needs of the pensioner. 
A furUthneriv setrusdiyty o of f dGatha acnoall ehcttetpd: //inudgicsapteadc eth.uagt .tehde un.gehed for free 
medical care is not limited to a particular age or a particular group of people. 
All pensioners and for that matter the aged, need a good medicare. As 
revealed by table 17 below, the call for free medical care was evenly 
distributed among the various age groupings 
Table 17: AGE OF RESPONDENTS BY PROVISION OF OTHER BENEFITS 
AGE Free Use of X'Ma Transl Relaxatio HelpW'kr Agreed 
Medic SSNIT Rent n sown But did TOT 
al Vehicle Bonu Subsi Social Houses nol Al 
Care s s dy Centres state 
Loan 
56-60 13 
61-65 26 13 47 
66-70 24 29 
70' 2 11 
TOTAL 58 21 100 
The study revealed further that 55 out of the 58 respondents who 
asked for free medical care are those who stated they were not satisfied with 
the amount of pensions received confirming the need for a supplement to the 
low levels of pensions paid . It can therefore be concluded that irrespective 
of age, income (pension). satisfaction with the scheme and other factors, 
medical care is an important issue for pensioners. 
3,6 Problems about the scheme 
Any operational institution or scheme is not without problems. The 
pension scheme for that matter is beset with some problems. These need to 
be identified, assessed and addressed to make the scheme more acceptable. 
Problems gathered from the study are listed in table 18 below. 
Table 18· PROBLEMS OBSERVED ABOUT THE SCHEME 
PROBLEMUSn iversity of GhaFnRaE Qht.t p://ugPsEpRaCc.e .ug.edCuU.gMh. PERC. 
Long processing period 19 19.0 19.0 
Minimum pension 28 28.0 47.0 
inadeQuate 
Pension payment to 2.0 490 
enStoners in rural areas 
System for calculating 6.0 55.0 
benefits 
No link between SSNIT 3.0 58.0 
and_pensioners 
No problems 28 28.0 86.0 
Not Stated 14.0 100.0 
TOTAL 100 100.0 
The major problem observed by respondent was the low minimum 
pension which they indicated was inadequate · not meeting their basic needs 
(28%). This has been a general problem throughout the study. Most 
responses given to questions asked dearly indicate the inadequacy of the 
minimum pension as well as pensions paid generally to pensioners. It is 
clear from the study that the expectations of pensioners are not being met as 
they are not satisfied with the level of pension payments received from the 
scheme. Thus, their lost income has not been replaced by the pensions they 
received. This is further confirmed as 14 out of the 28 respondents who 
stated this problem receive between ¢8,500 • ¢50,OOO as their monthly 
pension. 
The next major problem identified by respondents was the long 
processing period as stated by 19 of the respondents. It is worth noting from 
the table that 10 out of the 19 receive between ¢50,OOO· ¢100,OOO a month 
as against 8 who received between ¢8,500 and ¢50,000. That is to say that, 
the question of pension received did not compensate for the long processing 
period 
-- L~ pensions paid and long processing period revealed by the study 
confirms Ua nrievpeorrts ibtyy  Eojfu bGa h(a19n9a9 )h tthtpat: /m/uagnsy psaoccieal. usgec.eurdituy .gsyhstems of Sub-
Saharan Africa have experienced serious credibility problems due to many 
factors such as low benefit levels and poor services. 
fourteen (14) respondents on the other hand stated they had not 
observed any problems with the scheme. For this category of respondents . 
it can be inferred that they see the scheme as a system that is assisting 
pensioners to make a living and therefore see any problem as trivial. 
3.7 Life After Retirement 
Generally, pensioners have different views of themselves depending 
on the social, financial, physical and psychological life they find themselves 
in after retirement. To assess the lives of pensioners in the light of the issues 
earlier discussed, respondents were asked to indicate how they felt about 
their lives since retirement from four answers provided as 'very good ' 'good' 
'bad' and 'very bad' . 
Out of the 100 respondents, 8% stated they felt very good about their 
lives. Over half the respondents (56%) stated they felt good, 25% and 8% 
felt rather bad and very bad respectively while 3% did not state their position. 
From the responses, a total of 64% of the respondents indicated a positive 
feeling of their lives since retirement while 33% had a negative impression of 
themselves. Thus, despite the low pensions received, pensioners feel quite 
good about their lives. The table below shows the various reasons offered by 
the respondents for their positions. 
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Table 19: REASONS FOR IMPRESSIONS ABOUT LIFE SINCE 
RETIREMENT 
REASON FREQUENCY PERCENTAGE CUM. PERC. 
Have time to care for family 24 24.0 24.0 
Feel Healthy 16 16.0 40.0 
Have enough time to rest 9 9.0 49.0 
Employment/Investment 6.0 55.0 
income of great assistance 
Standard of living changed 9.0 64.0 
from good to bad 
Pension too meagre to sustain 19 19.0 83.0 
Accommodation problem 5.0 88.0 
Involved in social activities 8.0 96.0 
Not Stated 4.0 100.0 
TOTAL 100 100.0 
The mode of 24% are the pensioners who feel good or very good 
because they have enough time to care for their families . The next highest 
frequency of 19% on the other hand are those who feel bad or very bad 
because the pensions they receive is too meagre to sustain them. Other 
reasons provided in the table indicating a positive impression are those who 
feel healthy (16%), have enough time to rest (9%) involved in social activities 
(8%) and benefiting from income received from employment and investments 
It could be deduced that although many complained about the low 
levels of pension, they did not allow that to affect their life after retirement. It 
can therefore be stated that though money may be an important factor for 
satisf~ction in old age, other factors such as those pointed out by 
respondents are significant. 
3.7.1 Any Financial Changes After Retirement 
PUosnti.vreetirrseimtye not fi nGcohmaen ain  htetrtmp:s/ /oufg psepnasicoens.u pga.ied disu .ggehnerally reduced 
at retirement as compared to pre-retirement income. For this reason, 
pensioners who neither have any source of income nor are engaged in any 
income generating activity to supplement their pension income generally 
experience gloomy financial changes in their lives. From the study, 77% 
stated there had been some financial changes in their lives since retirement. 
20% had no financial problems while 3% failed to indicate their position. 
Examining the situation by gender, the picture was not different. The study 
revealed that of the 77 who responded in the affirmative, half of them i.e. 37 
were females as disclosed by table 20 below, with females accounting for 
48% of the total population. Reasons offered for their answers are indicated 
in the table below: 
Table 20: FINANCIAL CHANGES AFTER RETIREMENT BY GENDER 
FINANCIAL CHANGES MALE FEMALE NOT TOTAL 
STATED 
Yes 38% 37% 2% 77% 
No 11% 9% 20% 
Not Stated 1% 2% 3% 
Total 50% 48% 2% 100% 
The above table confirms that in terms of financial obligations or 
responsibilities, gender is irrelevant. Females in general and retired female 
workers in particular have financial responsibilities towards their nuclear 
family, grandchildren (if any) and the society at large. 
It is worth noting that the contemporary roles of women in general and 
Ghan~ian women in particular include financial commitments towards the 
keeping of the home. This has become more important in view of the high 
cost of living and changing economy which to a large extent makes it difficult 
for the men to perform their traditional roles as the sole breadwinners for the 
~me. This new role performed by women does not erode with age or cease 
at retireUmnenivt ersTihtye  osftu Gdyh aconnafi rhmtstp :t/h/aui grseptiarecde .fuemg.aeled uw.ogrhkers still have 
financial responsibilities towards their homes in particular and their social 
world in general as 18 of the 37 females explained that they could not afford 
some domestic responsibilities. 
Table 21 : REASONS FOR FINANCIAL CHANGES AFTER RETIREMENT 
REASON FREQUENCY PERCENTAGE CUM. PERC. 
Feels O.K. 14.0 14.0 
Inadequate pension 23 23.0 37.0 
Cannot afford some 44 44.0 81 .0 
domestic responsibilities 
life is sodifficuJt 3.0 84.0 
Support from voluntary 2.0 86.0 
on~anisations 
Not Stated 14 14.0 100.0 
TOTAL 100 100.0 
A total of 67 touched on the limitation of the monthly pension paid 
thus: inadequate pension 23%. cannot afford some domestic responsibility 
44%. For the bulk of the pensioners as revealed by the study, financial life 
after retirement is not an interesting affair. There is a great change in 
financial life as the meagre pension income received is unable to meet all 
needs of the pensioners thus making life very difficult for some of the 
pensioners as indicated by a section (3%) of them. 
The anxieties expressed by respondents are not peculiar to the 
Ghanaian situation. Schulz (1980) admits that one of the more persistent 
anxieties experienced by older adults relates to income security. According 
to him, social security was never intended to be a complete retirement 
income plan. It was designed to supplement pension plans provided by the 
individual's employer. Yel today, about 75% of retired elderly have only 
social security to meet their finanCial needs. (Barrow and Smith 1983). 
ManUy nliivvee rast iotyr  obef lGowh athnea g hovttepr:n/m/uegnstapllay cees.tuagbl.ieshdeud. gphoverty level 
While money does not always produce happiness, it is related to satIsfaction 
in later life. The need for food , clothing, shelter, recreation , transportation 
and ability to care for family (and grandchildren) does not decline with age. 
Following from this is the fact that most pensioners are unable to 
continue with a "normal- financially independent lives and therefore depend 
on assistance from other sources like children, spouses, extended family 
members friends etc. Some others, who may nol have the afore-mentioned 
people to assist them, may become a liability to the nation and the society at 
large. 
CHAPTER FOUR 
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4.0 SUMMARY OF FINDINGS. CONCLUSIONS AND RECOMMENDATIONS 
This chapter presents a summary and conclusion of the main findings 
of the study that examined how the pension scheme has impacted on retired 
workers in Accra . It also offers suggestions and recommendations to address 
the identified problems of the scheme. 
4.1 Summary of findings 
The SSNIT pension scheme established by legal instrument 
PNDCL 247 performs as part of its functions , the payment of benefits 
to retired workers who have contributed to the scheme during their 
working lives. Benefits paid which are earnings related , is expected to 
replace lost income or at best form a floor of income protection to 
ensure a meaningful life for the pensioner. 
However benefits paid as pension income to retired workers is 
inadequate. Currently, the basic/minimum pension paid is ¢8,SOO. 
Much as the introduction of a basic pension is admirable and 
supplements pension income of pensioners whose benefits faU below 
the basic after calculation, the level seems to be rather on the low 
side. The question that immediately comes to mind is "what financial 
needs of the pensioner can ¢8,SOO per month meet for the pensioners 
alone" not to mention cases where pensioners may have dependants. 
It is difficult to imagine how a pensioner can use ¢8,SOO for 
food, clothing utility services and above aU shelter and medical 
expenses. In addition, the banks deduct some monies from these 
meagre sums as bank changes worsening the plight of the pensioner 
Besides, quite a number of pensioners receive the minimum pensIon 
at the poiUntn oifv reertisreitmy eonft  wGithha junsat  ah tstmpa:/l/l upgerscpeantcaeg.eu rge.ceedivuin.gg hcomparatively 
higher levels of pension. 
Findings of the study confirmed that pensions paid are not adequate. 
At the point of retirement, (i.e. between 1991 and 1996) 17% of respondents 
received the initial basic pension payment of ¢6,500, a total of 72% received 
bet\Neen ¢8,500 and ¢100,OOO, 5% received pension income of between 
¢100,OOO and ¢200,OOO whilst 6% had above ¢200,OOO. 
The picture was not different with respondent's current pension levels 
Currently, a total of 76% receive between ¢6,SOO and ¢100,OOO while 13% 
get between ¢100,OOO and ¢200,OOO. 
Although the two pension levels (initial and current) discussed above 
were low, the latter pension levels were a bit higher than the former 
indicating that there is a progression of pension levels. The factor that 
accounted for this difference was the yearly indexation of pensions that seeks 
to hedge pension income of pensioners against the effects of inflation. 
Despite increments in pensioners' income over the years due to 
indexation, the amounts received are still very low. The plight of the 
pensioners is worsened with the persistent inflation in the country thus 
eroding real income making it difficult to make ends meet. Compounding the 
problems of pensioners is the cessation of some employment-related benefits 
that pensioners enjoyed or had access to. while in service. 
The inadequacy of pensions paid were traced back to some economic 
factors existing in the economy such as high cost of living and the generally 
low s~lary levels of workers in Ghana. Since pensions are earnings related , 
the higher the salaries of workers , the higher pensions they receive and vice 
versa. Low salary levels therefore accounts for low contributions made 
toward the scheme resulting in the payment of low levels of pension. 
ThereUfonriev einr sspitiyte  ooff  Gtheh ayneaar lyh titnpd:e/x/uagtiosnp oafc pee.nusgio.ensd,u p.egnhsioners are 
not satisfied with pension benefits received. The study revealed that 94% of 
respondents were not satisfied with pension payments received with the main 
reason being that the amount paid was woefully inadequate in view of high 
cost of living (S2%) and also for the fact that their financial commitments were 
greater than the benefits received (33%). It is worth noting that almost half of 
the respondents covered in this study suggested an increase or a review in 
the benefits paid to -reflect current cost of living-. 
Similarly, national level statistics obtained from the Benefits Unit of the 
pension scheme for October 1998, and April 1999, revealed a comparable 
situation. The average pension paid were ¢71 ,748.4S and ¢82,048.0S 
respectively. Out of 29,773 pensioners paid in April, 24,782 received 
pensions below the average of 71,748.48. This information is not different 
from the findings of this study as in both cases, majority of the retired 
workers received pension income below ¢100,OOO. 
However a few contributors received comparatively larger sums of 
pension income. For instance, the highest pension paid in October 1998 
and April 1999 were ¢1 ,112,093.72 and ¢3,30S,450.37 respectively while for 
the same period, the highest 25% lumpsum paid were ¢31 ,018,713.83 and 
¢90,174,S71 .60 respectively . In spite of the above which forms just a small 
percentage of the tolal pension payment, the fact still remains that pensions 
paid are low and inadequate. 
To beef up the financial position therefore. some workers plan for their 
post-retirement life by putting in place measures to enable them ha~e other 
sources of income. Findings from the study indicated that about a third (36%) 
of respondents had other sources of income such as tailoring , 
investment/shares. farming petty business and part-time employment. 
Most workers however rely almost entirely on pension income as data 
obtained inUdincaivteedr sthitayt  6o4f %G ohfa tnhea  rhettitrped:/ /wuogrskperasc hea.du gn.oe odtuhe.gr hsource(s) of 
income. Also. 86% of them are nol engaged in any income generating 
activity to supplement their pension income. For this category of pensioners, 
the inadequacy of the benefits received will be greatly felt. 
It is worth stating here that to enable one invest in some income 
generating activity that will provide a source of income in the future, one has 
to set aside some resource for that purpose whilst in employment. But. the 
low salaries received by workers make it very difficult if not impossible to 
achieve this. although some workers may have remarkable plans for that. A 
few who may have the means are thus able to set up for themselves other 
avenues for future income. In this respect, most workers retire just to live on 
the meagre pension and probably, assistance from children or other family 
members. 
There is a real need therefore, for the scheme to supplement pension 
income of its retired workers through the provision of other non-cash benefits 
to enable pensioners live a good and quality life. It is therefore not surprising 
that 58% of respondents. called for the institution of free medical care for 
pensioners as most retired workers are characterised by ill-health as well as 
the onset of some chronic diseases such as hypertension, diabetes etc. 
Health needs of pensioners are very crucial since maintaining a good health 
at that age is very expensive. Other benefits suggested by respondents 
were the use of SSNIT vehicles by pensioners, Christmas bonuses, 
transport/rent subsidies and the need for the scheme to assist workers own 
houses since accommodation is an imperative issue in the country 
Apart from the need for the scheme to provide other benefits for the 
pensioners. the study also found out that there were other aspects of the 
scheme that needed to be reviewed. These aspects include processing 
period of benefits. From the study. 44% of respondents had their pension 
benefits processed in three months, 11% between three and six months while 
29% had thUenirisv perroscietyss oedf  Gbehyaonnda  shixtt pm:o//nuthgss. pCaocnese.uquge.entdlyu, .agbhout one-fifth 
of the respondents (19%) observed long processing period as a problem with 
the scheme. Other problems noted were the system for calculating benefits, 
the need for the scheme to establish a link between it and its pensioners and 
finally, the scheme to institute measures to ensure that pensioners in rural 
areas receive their pensions without any problems. 
The above-discussed problems notwithstanding, pensioners view the 
scheme as fairly good. 89% of them rated the scheme as satisfactory (fair 
and good) saying that it ensures basic assistance to pensioners through the 
provision of a minimum income protection for retired workers. Though 
incomes paid to pensioners may not be adequate to cover the total needs of 
the pensioner, it ensures them a minimum support for living in line with the 
main objectives of a pension scheme. 
Finally it was noted from findings of the study that by and large, 
incomes of retired workers are reduced at retirement and therefore most of 
them experience a great change in their financial lives after retirement. Due 
to the limitation of the monthly pension income, most of them cannot afford 
some domestic responsibilities thus making life difficult for them. Retired 
female workers were not left out of this problem as 37 of the 48 covered in 
the study indicated there has been financial changes in their lives since they 
retired. 
In view of the problems discussed above, Ghanaian workers do not 
normally retire voluntarily before the official retiring age of 60. 17% of the 
pensioners who retired voluntarily did so because of ill health or a 
deteriorating health or retrenchmentlliquidation of their establishments. It can 
therefore be concluded that in the absence of any negative factors affecting 
the worker directly or indirectly such as the one discussed above, Ghanaian 
workers will be willing to work until they are officially retired 
the S~~dY ;ndicated there has been financial changes in their lives since they 
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In view of the problems discussed above, Ghanaian workers do not 
normally retire voluntarily before the official retiring age of 60. 17% of the 
pensioners who retired voluntarily did so because of ill health or a 
deteriorating health or retrenchment/liquidation of their establishments. It can 
therefore be concluded that in the absence of any negative factors affecting 
the worker directly or indirectly such as the one discussed above, Ghanaian 
workers will be willing to work until they are officially retired. 
Conclusion of Findings 
In conclusion, the study revealed that the impact of the pension 
scheme on Ghanaian workers has not been as expected in that, majority of 
its beneficiaries receive very low pension incomes. Also, a number of factors 
in the economy as well as others inherent in the scheme affect benefits paid 
out to pensioners. Ghanaian workers suffer loss of income in their old age 
basically because of low levels of incomes during their active service 
Contributions made toward the scheme are minimal and therefore pensions 
paid subsequently after retirement are also low. 
The problem of inflation was also identified as another important 
setback since the purchasing power of the pensioners are constantly being 
eroded as a result of this phenomenon. 
Whereas a few retired workers from some well paid institutions collect 
comparatively high levels of pensions, majority of pensioners receive 
pensions below the average pension. Though the scheme attempts in a 
modest way to increase pension payments each year, the effect seem to be 
insignificant because of the constantly high rates of inflation and high cost of 
living. More so, the basic pension payment of ¢8.S00 paid out by the scheme 
~fully inadequate. Therefore a few who are able to secure jobs do so 
mainly tUo nsuivpeprlesmiteyn ot fth Geihr maneaag rhet tppe:n/S/uiogns Ipnacocmee.u g.edu.gh
For this reason, there is the need for the scheme to provide other non-
cash benefits and also review upwards pension payments particularly the 
minimum pension of ¢8.500 since most retirees depend almost entirely on 
pension income received . Under these circumstances, hfe after retirement 
seems rather unpleasant for the retirees because they are unable to make 
ends meet to live a decenllife. 
In sum, the study has confirmed that pension incomes are low, 
pensioners are dissatisfied with pensions received and so require the 
provision of other supplementary benefits. 
Sight was however not lost of the fact that though pensions paid are 
not adequate, the scheme provides a basic assistance to pensioners and 
therefore needs to be reviewed to ensure that meaningful pensions are paid 
to retired workers. 
Suggestions/Recommendations 
The social security scheme in Ghana has become a major player in the 
national scene in terms of its functions in providing income protection for 
retired workers. It is geared at mitigating problems of workers after 
retirement. Though this scheme is making efforts to meet the purpose for 
which it was established, much needs to be done to ensure that contributors 
to the scheme who retire, are financially protected 
At the moment. the scheme strives to achieve this by increasing 
pensions each year. However external factors like the rate of inflation and 
the high cost of living which are beyond the control of SSNIT greaUy affect 
Incomes in the country including pensions. This is a very disturbing issue In 
that muUchn ivase rist itisy  othfe  Gohbajenctaiv eh totpf :t/h/ue gsscphaemcee. utog .eendsuu.rge hthat its retired 
contributors are not destitute by ensuring an adequate income protection, 
external economic factors tend to negate the laudable objectives. In that 
regard, if the rate of inflation heightens after pensions have been indexed in a 
particular year, the pensioners consequently suffer the loss. 
4,3,1 Establishment of Complementary Schemes 
One major means by which this problem can be solved or at best 
minimised is through the provision of a safety net in the society to provide 
adequate post-retirement income and also protect the pensioner from the 
effect of inflation and other economic factors in the economy. 
The main objectives of a social security policy are to reduce poverty 
and provide a social safety net of income protection for the people. The 
main ways by which such social security programmes can be administered is 
by their methods of allocation of cash payments and services to 
beneficiaries. These methods include social insurance, social assistance, 
universal programmes and public provident funds (A. Kapini Alatori, 1999). 
Currenlly, the SSNtT pension scheme covers only social insurance and not 
the rest and therefore does not serve as a safety net 
In a bid 10 provide a safety net for retired workers, the other systems of 
retirement income should be implemented in this country. Apart from the 
scheme which is a primary one, there is the need for other secondary 
schemes like occupational pension schemes regulated by a legal mechanism 
as well as private pension schemes. 
In effect, pensioners need other forms of benefits to supplement the 
basic or primary penSions they receive to enable them live a decent financial 
life after retirement 
Complementary schemes provide benefits additional to those provided 
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by the basic scheme by raising the level of total benefits received. It also 
complements the basic scheme by providing less stringent conditions for 
entitlements to benefits. 
In this wise, income sources in post-retirement life should expectedly 
come from at least the three formal forms of retirement income schemes 
These together form a safety net for the retired worker and also acts as a 
hedge against inflation 
Occupational schemes are those established for the benefit of 
employees working for a particular firm or for employees within a certain trade 
or profession. Personal pension schemes on the other hand, take the form of 
an individual contract between the employee or self-employed person and a 
pensions or insurance company under which the individual pays contributions 
into a fund managed by the company. The company will in turn provide 
beneficiaries with a cash lumpsum at retirement that could be used to 
purchase an annuity to provide periodic payments to the individual for the rest 
of his life 
Another income source that could be beneficial to the retired worker in 
his post-retirement life is income from investments. There is the need to 
invest in some ventures whilst working to make one comfortable after 
retirement. Diversified income sources thus provide beHer security and 
prevents the situation of over-reliance on pension income which for some 
people may not ensure adequate income security in retirement. Some useful 
areas of investment include among others, shares, unit trusts, life insurance 
policies and petty businesses 
4.3.2 Efforts by the Government 
DUune itvoe trhsei tuyn ofafv Gouhraabnlea  ehctotnpo:m//uicg csopnadcitieo.nusg in.e tdhue .gechonomy already 
identified in the study (as high cost of living, low salary levels due to inflation 
and the general poverty level existing in the country), there is the tendency for 
citizens in a country to expect the state to be fully responsible for their socia· 
economic affairs 
In actual fact, though people may be willing to take up other private 
pension scheme or invest in some shares or insurance policies, low salaries 
received make it rather difficult if not impossible to even save let alone 
contribute towards other schemes. Action needs to be initiated by the 
government in an attempt to address this fundamental issue to ensure 
payment of meaningful salaries to workers. If salaries are high, pension 
incomes will correspondingly be high and also, individuals can take up 
supplementary schemes and thus increase their post·retirement income. This 
can only be achieved if attempts made by the government to alleviate 
poverty are intensified. The high level of poverty in Ghana means that 
continued strong economic growth is a fundamental requirement to provide 
opportunities and resources for poverty alleviation (Kanbur and Link, 1994). 
4.3.3 Increase/Review of Minimum Pension 
Though it will be extremely difficult for the government or the scheme 
for that matter to provide all needed services of its pensioners. the scheme 
should be developed enough to absorb the increasing demand for review of 
benefits and other services and facilities. Pension benefits should be 
designed to provide the pensioners with an adequate level of income 
protection sufficient to maintain their financial independence or to a large 
extent, replace their lost income. 
Public perception about the administration of the scheme has more to 
do WIth the adequacy of pensions paid. Therefore the scheme needs to be 
reviewed to make it more responsive to the demands of its contributors The 
minimum pension of ¢8,500 needs to be reviewed upwards and additional 
benefitsU pnroivveidresdi.t y of Ghana http://ugspace.ug.edu.gh
Additionally the health needs of pensioners need to be seriously 
addressed as a means of providing other non·cash benefits to supplement 
pension income. With the trend of world economic affairs, it is imperative for 
the scheme to pay more attention to health care delivery of its aged retired 
members by ensuring that the institution of the proposed national health 
insurance scheme is expedited. It is one major way by which pensioners 
financial burden can be eased since at that age, a lot of money is spent to 
keep themselves healthy. As a preliminary measure, a special concession 
could be instituted for the pensioners whereby they would be given either free 
medical care in the government hospitals or to be attended to at subsidised 
4.3.4 Review of Policies and Social Security Law 
The existing social security policies need to be reviewed to enable the 
informal sector that forms a greater portion of the working population in 
Ghana to be widely covered. New strategies need to be adopted by the 
scheme to attract that sector. By this, more funds will be made available for 
investment and consequently improve pension benefits 
In this regard, SSNIT's attempt to review the social security law 
PNDCL 247, is a step in the right direction. According to official sources, the 
idea is to review the law to address problems that were not anticipated when 
the initial law was promulgated. It is designed to meet the expectations of 
members of the scheme and also bring the scheme in line with changes in the 
pension industry worldwide. 
New proposals made to widen the net to cover any person resident in 
Ghana who opts to join it. and to base the minimum contributions to the 
scheme on the national minimum wage are quite remarkable. This will lead to 
~ increase in the fund base for more investment income leading to an 
increase Uin ntihvee rbsaistyic /omfi nGimhuamn ap ehntstpio:n// upgasidp aasc ew.uelgl .easd ug.egnheral pension 
levels. 
Another welcome proposal in the review of the law that is quite 
laudable is the introduction of retirement grant for those who do not Qualify for .. 
the pension benefits , as well as those who though are ill do not qualify fr 
invalidity benefits 
4.3.5 Delays in Claim Processing 
On delays in payment of pension claims which is basically caused by 
unreliable records , improper completion and non-endorsement of documents 
among others. extensive education needs to be carried out for prospective 
claimants to be aware of their obligations and responsibilities to ensure 
smooth and quick processing of their claims. The scheme needs to ensure 
that records of contributors both financial and personal, are properly kept and 
made easily accessible for processing of claims. Efforts should also be made 
on the part of officials of the scheme to quicken and possibly shorten 
processing procedures to enable pensioners receive their first time benefits 
promptly. 
In sum, findings from the study have laid bare the fact that the SSNIT 
pension scheme has not made a great impact on pensioners in terms of 
benefits offered. Though it was instituted not too long ago (1991) , there is 
the need for management of the scheme to examine and review policies 
governing the scheme to respond to expectations of its contributors 
particularly in the area of additional benefits as well as increase basic 
minimum pension. Perception of the scheme by pensioners in particular and 
workers in general has not been positive because majority of pensioners in 
the country do not live good and qualify lives. This is basically due to limited 
penSion Incomes coupled with high cost of living, inflation and low salary 
levels that have a bearing on pension income 
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Perhaps, a concerted effort from the government. management of the 
scheme, employers as well as individual workers to help address this issue is 
needed. The government on its part needs to address the salary problem of 
workers in Ghana and employers need to institute occupational schemes for 
their workers. Management of the scheme will also have to put measures in 
place to ensure payment of meaningful pension and other benefits while the 
individual (worker) subscribes to private pension programmes. Post-
retirement income from all these sources will form a safety net for the retired 
worker and enable him live a meaningful life after retirement 
University of Ghana http://ugspace.ug.edu.gh~~j. 
BIBLIOGRAPHY ~)< 
Adjei . E N. A. (1997) Introductory Background to the Mechanics of Social 
Security, SSNIT, Accra . (Unpublished) 
Adjei , E. N. A. (1997) The Social Security Scheme in Ghana. SSNIT, Accra. 
(Unpublished) 
Amartey-Vondee, E. (1985) Forecasting Your Income and Expenditure in 
Retirement. Paper presented at the Pre-retirement Preparation Programme, 
SSNIT, Accra . (Unpublished) 
Apt Van Ham. N. (1986) Support Sources and Well-being of the Elderty in 
Ghana. WZeitschrift fur Gerontologie" Vol .19, No.2 Mar/April1986. Pg. 90-95. 
Apt, Nana Dr. (1997) Ageing in Africa. "World Health Organisation Ageing and 
Health Programme. University of Ghana. Accra 
Asenso-Okyere , W., Felix A. Asante and L. Oware-Gyekye (1991) Strategies for 
Rural Poverty Alleviation in Ghana; ISSER, Legon. 
Atafori . A _ K . (1999) ~SSNIT Strives for Change" in Business Watch Vo1.3 , No. 3 
Atchley, R. C. (1988) Social Forces and Aging : An Introduction to Gerontology: 
Wadsworth Inc. USA. 
Barbone, L. and Luis-Alvaro Sanchez (1999) Pensions and Social Security in 
Sub-Saharan Africa : Issues and Options. International Social Security 
Association . 13 African Regional conference, Accra 
Brown. C. K. (1995) The Future of the Aged in Ghana. Paper presented at the 
National Roundtable on the Aged in Ghana. Accra International Conference 
Centre , Accra . 
Brown, C. K. (1986) Social Trends and Social Development: Problems in Ghana. 
Chinery-Hesse, M. (1994) Poverty and Development Analysis and Policy: The 
Hague. 
Ejuba ,. ~ . J. (199~) Pensi~n Schemes in Africa : International Social Security 
ASSOCiation 13 African Regional Conference, Accra . 
Est~lIe , J . (1992). Income Security for Old Age: Conceptual Background and 
Major Issues: Policy Research Working Papers: Country Economics Dept. :The 
World Bank WP 5 977. Washington DC 
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Evans, Lloyd (1999) ~Making Social Security Meaningful" in the Daily Graphic' 
Wednesday, July 8, 1999. 
Hafferman, J., Rosale Ambrosino and Guy Shuttlesworth (1988) Social Worker 
and Social Welfare: An Introduction: New York : West Publishing Company. 
Huttman. E. D. (1981 ) Introduction to Social Policy: New York Mc Grawhill 
Kanbur, R. and Stephen Mink (1994) ~Poverty and Accelerated Gro~h in 
ft 
Ghana. Policy Issues in Light of Global Experience in Economic BulletIn of 
Ghana, Vol. 4 NO.1. Economic Society of Ghana, Accra 
Kral, J. and Jana Klimentova (1995) Actuarial and Financial Problems 
Associated with Development of Complementary Schemes in European 
Economies in Transition: International Social Security Association. 11 " 
International Conference on Social Security Actuaries and Statisticians. Anthens 
19l!\ - 21 '1 June. (Unpublished) 
Mc Greevey, W. (1990) Social Security in Latin America ; Issues and Options for 
the World Bank: World Bank Discussion Papers 110. Washington DC 
Mitchell, Olivia, S. (1993) Trends in Retirement System and Lessons for Reform. 
Policy Research Working Paper: Education and Social Policy Dept. : World bank 
WP 1118. Washington DC 
Odoom, F, (1998) Concepts and Principles of Social Security. SSNIT, Accra 
(Unpublished) 
Pension Schemes (1997) International Labour Organisation: Geneva. 
Popple, P. R. and Leslie Leighninger (1990) Social Work, Social Welfare and the 
American Society: Allyn and Bacon. USA. 
Roadburg, A. (1985) Ageing, Retirement. Leisure and Work in Canada: Metheun 
Publications 
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II: US Gov·t. Printing Office, Washington D. C 
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Zastrow. C. (1993) Introduction to Social Work and Social Welfare: Brooks/Cole 
Publishing Company. Pacific Grove, California 
THE IMPACT OF THE SSNIT PENSION SCHEME ON ITS 
RETIRED MEMBERS 
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~::e~:'~I::~mteh~ ~~~~: :t~~ :~oc; ;:n~~:rS:::~'::;S5:e:;:~:hr;;;:~ . All 
,nformat longiven will be: t reotecdos confident ,ol. Thonkyouforyourco-operotlon 
(1) PERSONAL lNFORMATION 
(0) Age (b) Sex .. (c) Ethnicity 
(d) Marital Status: Married D Single D Widowed D Divorced D 
(e) Place of last employment 
(f) Position held before retirement 
(9) Educational Background: 
Primary/Middle D Secondary D University D 
(h) Number of Dependants (if any) 
(2) RETIREMENT lNFORMATION 
(0) Did you retire voluntarily or compulsorily? 
Voluntary D Compulsory D 
ei) If voluntary please state reasons ... 
(b) What year did you go on retirement? 
(e) At what age did you retire? 
Cd) When did you receive your first pension? 
(e) What was your first pension payment? 
(i) ¢8.500 or below D (ii) Above ¢8,500 - ¢50,OOO D 
(iii) Above ¢50,OOO - ¢100,OOO D (iv) Above ¢IOO,OOO - ¢200,OOO D 
(v) Above ¢200,OOO D 
(f) Are you receiving full or reduced pension? (i) Full 0 (ii) Reduced 0 
(9) Did you opt for 25"1. . lumpsum ? Yes 0 No 0 Please give 
reasons for your option. 
(31 INFORMATION ON SSNIT 
(0) How lonUg ndiivde irts tiotyk eo Sf SGNhIaTn tao  hprtotpc:e/s/us gyosupra pceen.suiogn. eapdpul.igcahtion? 
(;) Up to 6 weeks 0 (;i) 2 months 0 (;ii) 3 months 0 
(;v) 3 - 6 months 0 (v) Above 6 months 0 
(b) Were you satisfied with the services offered by SSNIT in the course 
of processing your application ? 
Yes 0 No 0 Please give reasons ... 
(e) What is your present pension payment? 
(i) ¢8,500 0 Oi) Above ¢8,500 - ¢50,OOO 0 
(;;;) Above ¢50,OOO - ¢100,OOOO Ov) Above ¢100,OOO - ¢200,OOOO 
(v) Above ¢200,OOO 0 
(d) Are you satisfied with the amount of pension received? 
Yes D No D Please give reasons ..... 
(e) Are your pension payments regular? V,sO NoD 
(f) Do you receIve your pension payment on time? YesD No 0 
(9) Are there any benefits you f eel SSNIT could provide aport from 
monthly pensions? ............................... ...................................................................... . 
(h) Are there any proble ms you have observed about the SSNIT sche me? 
(i) How would you rate t he scheme? GoodD Fair 0 PaorO 
Please give reasons 
U) What ore your views about the scheme? 
(k) Are there any suggestions you could offer to help improve 
benefiUtsn/siveervriscietys  ooff  SGShNaInTa? h .t.t.p...:./../.u...g..s...p...a..c...e.....u ..g.....e..d...u.....g..h... . 
(4) OTHER INFORMATION 
(0) Do you have other sources of income? Yes 0 No. 0 
(b) What is your source of income? 
(c) Are you in any form of employment? Yes 0 No. 0 
(d) If Yes to (c) above. is it for income or to occupy yourself? 
(e) If No to (c) above how do you occupy yourself? 
(f) Do you have any assistance from family members/children 
Ves 0 No. 0 If Ves, how often? 
Monthly 0 Frequently 0 Occasionally 0 
(g) Do you have any dependants (children) currently in school? 
Ves 0 No. 0 
(h) Genera lly, how do you feel about your life since retirement? 
Very Good 0 Good 0 Bad 0 Very Bad 0 
(Please give reasons) .. 
(i) Have there been any changes(financiaily) in your lifestyle after 
retirement? /e. Are there certain things you used to do before 
retirement but cannot offord now. Yes 0 No D 
If yes, please explain ... 
Are there any benefits or assistance you receive from the SSNIT 
Pensioners Association?