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Everyone needs money to live on when they retire or can no longer work.  The reality, however, appears to be that few people spend time thinking about long-term savings for their days on retirement. Another striking reality is that because more people are living longer, the period of retirement could be as much as a quarter of one’s life-span.  When we retire or can no longer work, we will still need to pay bills and have money to meet financial and social obligations.

The needs of workers after retirement include the following: food, shelter, clothing, transportation, healthcare, other household expenses, funeral donations, family commitments, entertainment and other social activities.  Unfortunately, the traditional and customary ways of helping the aged to meet the above needs have broken down.  Support from children and relatives are less reliable and forthcoming.

Give how gloomy retirement without adequate income can be, there has always been the need to put in place, an appropriate pension scheme that will ensure brighter retirement period for workers.  Pension schemes that have been operated in the country so far have, beside their limitations, also failed to consider the plight of workers in the informal sector, who constitute the majority of the working population in Ghana.

The needs of workers after retirement include the following: food, shelter, clothing, transportation, healthcare, other household expenses, funeral donations, family commitments, entertainment and other social activities.  Unfortunately, the traditional and customary ways of helping the aged to meet the above needs have broken down.  Support from children and relatives are less reliable and forthcoming.

Give how gloomy retirement without adequate income can be, there has always been the need to put in place, an appropriate pension scheme that will ensure brighter retirement period for workers.  Pension schemes that have been operated in the country so far have, beside their limitations, also failed to consider the plight of workers in the informal sector, who constitute the majority of the working population in Ghana.

MEETINGS WITH INFORMAL SECTOR REPRESENTATIVES

To appropriately capture the concerns and needs of workers in the informal sector, the Presidential Commission on Pensions held discussions with a cross-section of the informal sector, including representatives of the Council of Indigenous Business Association (CIBA), Ghana Union of Traders’ Association (GUTA), Ghana Cocoa, Coffee and Sheanut Farmers Association, the Ghana Private Road Transport Union of TUC (GPRTU), the Greater Accra Markets Associations (GAMA) and the Ghana National Association of Garages, to solicit their views on a retirement scheme for that sector.

Indeed, the Commission also noticed that the absence of a formalized arrangement that provides retirement income security for the informal sector was inconsistent with the provisions of Article 37 (6) (a) of the 1992 Constitution which enjoins the State to: “ ensure that contributory schemes are instituted and maintained that will guarantee economic security for self-employed and other citizens of Ghana.

During the Commission’s interactions with representatives of the informal groups, they were enthusiastic about participating in any form of retirement savings scheme that would meet their retirement income needs and would welcome the establishment of such a scheme.

SPECIAL PENSION SCHEME FOR THE INFORMAL SECTOR

Provision has been made in the third-tier voluntary personal pension scheme of the new three-tier pension scheme, to cater for the peculiar needs of workers in the informal sector of the economy who constituted the majority of workers in the country. 

The informal sector workers will elect to contribute any amount they can afford on monthly or regular basis.  It must be emphasized that the benefits that will accrue will depend on how much contribution is made.  The more the amount contributed, the bigger the benefits. 

Informal sector contributors will have two accounts:-

a) a retirement account (to provide benefits on retirement) and 

b) a personal savings account with rules for withdrawals before retirement (e.g. for education and business enhancement).

While contributors can access benefits before retirement from personal savings accounts, the proceeds of the retirement account shall only be paid on the retirement of the contributor as monthly or quarterly pensions.  In this way, workers in the informal sector, just like their counterparts in the formal sector (on the First and Second Tiers of the new scheme) will also receive monthly pensions (from the retirement account) as well as a lump sum (from their personal savings account) to begin retirement.

HOW TO PARTICIPATE IN THE SPECIAL INFORMAL SECTOR SCHEME

The informal sector workers can participate as organized groups (Group Personal Pension Scheme) for example, Cocoa Farmers or Makola Market Women or Koforidua barbers or Hohoe drivers or Moree fishermen, can come together to form, say, “Hohoe Drivers Pension Scheme”.

There will be Corporate Trustee companies and insurance companies that will establish personal pension scheme or group pension schemes.  The Groups can also set up their own schemes and seek technical advice or outsource administration and other technical work to third party administrators.

All the Pension Funds and assets will be kept by a custodian, which is mainly a bank or financial institution registered by the Pension Regulatory Authority.  But the choice of custodians lies with the group.  The National Pensions Regulatory Authority (NPRA) can also provide guidance when contacted.

Contact NPRA via email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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Over the years, concerns have been raised and agitations made by public servants over inadequacies of the level of pensions to sustain a respectable life for retired public servants. Of particular concern to most workers’ groups has been the low pensions received by workers ... | Readmore