Former Chief Executive of the National Pensions Regulatory Authority (NPRA), Dr. Daniel Seddoh, has stressed the importance of integrating job creation into the operations of the Social Security and National Insurance Trust (SSNIT) for its sustainability. He argued that SSNIT’s ability to thrive hinges on attracting more young participants to the scheme.
The pension system operated by SSNIT is a social scheme, structured with predefined benefits that often exceed contributions upon retirement, placing a significant burden on managers and trustees to ensure its long-term viability.
According to a report by the International Labour Organisation (ILO), SSNIT’s reserves are projected to be depleted by 2036, with income sources falling short of meeting annual expenditures as early as 2029. It states further that, SSNIT having no other means of payment will depend on the reserves it has, to meet the payment demand leading to the start of the depletion process. This is likely to continue till 2036 when the reserve will drop to zero as stated by the valuation report. Despite reassurances from SSNIT management, concerns over the scheme’s future have persisted.
Dr. Seddoh, drawing on his expertise in insurance and finance, told The Accra Times that “as long as individuals earn more than they contribute, SSNIT’s sustainability remains uncertain”.
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To address this challenge, Dr. Seddoh proposed a strategic approach for SSNIT to leverage contributions for job creation, particularly targeting younger people. He emphasized the importance of creating employment opportunities to sustain the scheme over the decades of their contributions.
“Younger people do not go on pension immediately. If you pick them let’s, say age 25, by the time they get to 60, they would have done 35 years before they qualify for pension, so that is what will sustain the scheme,” he said.
He cautioned that SSNIT will continue to struggle if the scheme’s funds are not supporting job creation.
“If that is not happening you will certainly have difficulties and in our case that is not happening. Employment plus capital gains in those settings, that is what would have sustained it better than what it is,” he added.
Dr. Seddoh also criticised SSNIT for prioritising collection efforts over investment strategies aimed at job creation.
Prior to pension reforms in 2008, SSNIT operated without regulation, leading to significant investment challenges. Despite being regulated by the NPRA, the operational changes have been minimal. Dr. Seddoh urged both the NPRA and the government to address the findings of the ILO report and advocate for reforms to rejuvenate SSNIT’s prospects.
Recently, President Nana Addo Dankwa Akufo-Addo fired the Director-General of SSNIT, Dr John Ofori-Tenkorang who was due to retire in January next year and replaced him with his deputy Mr. Kofi Bosompem Osafo-Maafo, who happens to be the son of his senior advisor Yaw Osafo Marfo. However not much is expected from the changes in management.
