History / Background

In 2004, concerns were raised and agitations were 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 was the low pensions received under the Social Security and National Insurance Trust (SSNIT) Pension Scheme compared to those still under Chapter 30 of the 1950 British Colonial Ordinances (Pension Ordinance No. 42), popularly known as CAP 30.

In addition, pension schemes that were been operated in the country, beside their limitations, also failed to consider the plight of workers in the informal sector, who constitute the bulk (about 85%) of the working population in Ghana.

The concern rose to a peak in agitation and protests by workers’ organizations for the restoration of public service pensions to the level of the provisions still available to some public officers under CAP 30, in place of the SSNIT system that was introduced in 1972 as the mandatory and universal pension scheme for all employees.

In recognition of the need to ensure a universal pension scheme for all employees in the country, and to further address concerns of Ghanaian workers, the Government in July 2004 initiated a major reform of the Pension System in Ghana. The process started with the establishment of a Presidential Commission on Pensions under the chairmanship of Mr. T. A. Bediako.

The Bediako Commission was charged with the responsibility to examine existing pension arrangements and to make appropriate recommendations for a sustainable pension scheme(s) that would ensure retirement income security for Ghanaian workers, with special reference to the public sector.

The Commission submitted its Final Report in March 2006. The Government accepted almost all the recommendations of the Commission and issued a White Paper (W.P. No. 1/2006) in July, 2006.

The main recommendation of the Commission was the creation of a new contributory Three-Tier Pension System for Ghana, funded by direct contributions of employers and employees to, replace existing parallel pension schemes.

The new contributory three-tier pension scheme comprises two mandatory schemes and a voluntary scheme as follows:

  • a first tier mandatory basic national social security scheme which will incorporate an improved system of SSNIT benefits, mandatory for all employees in both the private and public sectors;
  • a second-tier occupational (or work-based) pension scheme, mandatory for all employees but privately managed, and designed primarily to give contributors higher lump sum benefits than presently available under the CAP 30 and SSNIT pension scheme; and
  • a third tier voluntary provident fund and personal pension schemes, supported by tax benefit incentives to provide additional funds for workers who want to make voluntary contributions to enhance their pension benefits and also for workers in the informal sector.
  • It is important to underline that provision has been made in the 3rd-Tier voluntary Personal Pension Scheme to cater for the peculiar needs of workers in the informal sector of the economy which covers about 85% of the working population.

Other major accepted Recommendations in the White Paper included

  • Establishment of a National Pensions Regulatory Authority to regulate both public and private pension schemes in the country; 
  • The CAP 30 Scheme is not sustainable and should be phased out; 
  • Decentralization of public sector pension management and a restructured administrative system for CAP 30, while it lasts; 
  • Restructuring of SSNIT which should include an overhaul of the governance, management and administrative structures 
  • Review of SSNIT Law 
  • Pension Coverage for the Informal Sector; 
  • Unification of Pension – The proposed Pensions Regulatory Authority should, within five years after coming into effect of the new pension scheme, achieve unification of all pension schemes in the country.

To Implement the recommendation in the White paper, an 8- member committee known as the Pension Reform Implementation Committee (PRIC) with  a Consultant was set in October, 2006 under the chairmanship of Mr. T. A Bediako of blessed memory.

The Committee’s work led to the enactment of a new pensions law in 2008. The New Pensions law, The National Pensions Act, 2008 (Act 766) was promulgated on 12th December 2008.

The 3-Tier Pension Scheme was launch in September 2009 by the President of the Republic of Ghana , late Professor John Evan Atta Mills with the implementation commencing from 1st January, 2010.

In 2011, the accompanying Regulations, The Basic National Social Security Scheme, (LI 1989) and the Occupational and Personal Pension Scheme (General) Regulations (LI 1990) were passed by Parliament of Ghana for effective implementation of the Act 766.