Accra, Nov. 24, GNA - The Africa Centre for Retirement Research (ACRR), a research institute with focus in retirement and pension, has called on Parliament, policymakers and stakeholders to take steps to address the “imbalance” in the finances of the Social Security and National Insurance Trust (SSNIT).
It said that must be done through parametric and legislative reforms to safeguard SSNIT, claiming the Trust might not be able to pay full scheduled benefits on a timely basis by 2037 if nothing was done.
ACRR said the examination of the SSNIT Scheme Fund ratios and cash flow measures, including income rates, cost rates and resulting annual balances, according to the last two actuarial evaluations of the SSNIT Scheme, proved that the Basic National Social Security was facing medium to long-term sustainability dangers.
It said the last two Actuarial Valuation Reports of SSNIT certified that the SSNIT Scheme was not financially sustainable, giving an indication that funds on, which the Trust relied to pay benefits had been running low.
Section 53 of the National Pensions Act, 2008 (ACT 766) stipulates that an external actuarial valuation of the SSNIT Scheme is carried out every three years, necessitating the conduct of two actuarial valuation exercises for the period ending December 31, 2014 and December 31, 2017 by the International Labour Organisation (ILO) and the Actuarial Department of SSNIT.
Mr Abdallah Mashud, Executive Director of ACRR, speaking at a media briefing on the theme: “Sustainability of the SSNIT Pension Scheme: Current Actuarial Status, implications and proposed policy responses”, said the Actuarial Variation Report carried out in 2014 and 2017 was worrying and that recommendations on reviewing rates, benefit provisions and risk reduction strategies must be implemented.
He said the 2014 assessment also projected that fund reserves of SSNIT were set to deplete in 2042 with the 2017 valuation also predicting the depletion of reserves in 2037.
Mr Mashud pointed out that an acceleration of fund seserve depletion by five years between the two successive valuations was significant as it illustrated the depth of mismatch that existed between the Scheme’s assets and liability.
He said, whereas in 2014, the Government had 28 years to figure out how to avoid reserve depletion and imminent collapse of the scheme, the number had dropped to 19 years as at the end of 2017 within three years.
According to ACRR, the next actuarial valuation would be based on data for the period January 2018 to December 2020, and that considering the economic impact of COVID-19 pandemic on the financial markets, the Trust was likely to report another fiscal year loss on its investment.
Also, the Executive Director said the growth of the pensioner population continued to outstrip the corresponding growth of contributors as the number of workers contributing to support a pensioner dropped further from nine contributors per pensioner in 2013 to seven in 2020.
Therefore, he said, based on income expenditure dynamics among other considerations for the period 2018 to 2020 and its expected impact on reserves, the depletion date for the next valuation may come earlier than expected.
Among other proposals, Mr Mashud recommended that the contribution or cost rate necessary to sustain the Scheme for future generations was projected to increase from 12.3 per cent in 2018 to reach a level of around 17.4 per cent in the next three decades.
He stated that the present contribution rate of eleven per cent was insufficient in 2018 to cover the expenditure of the Scheme, and called on Parliament to review it because the present rate was no longer sustainable.