The role of Ghana’s new three tier pension scheme and its effectiveness in providing social security for Ghanaians

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This paper investigates the role and effectiveness of Ghana's new three pension scheme in providing and ensuring income security for Ghanaians in their old age. It discusses the state of the current three tier pension scheme and how it measures up against other pension schemes such as the SSNIT pension scheme which predated it. This research is motivated by a historical inability of the pension schemes to fully resolve the issues of pension schemes pre-dating them in the literature. To fully appreciate the issues raised this research addressed the following questions. 1. What are the weaknesses inherent in Ghana's different SSNIT pension schemes over time? 2. Can the new pension scheme address these weaknesses identified? 3. Is the current scheme effective and adequate in providing insurance for Ghanaians To answer these questions, information was obtained through interviews of several stakeholders in the Ghanaian pensions industry such as the Social Security and National Insurance Trust and a number of licensed and approved Trustees, Custodians and Pension Fund Managers. Additionally, through questionnaires, this paper was able to measure how Ghanaians currently under the new pension scheme were aware and understood the new scheme. A analysis of the data gleaned from both interviews and questionnaires showed that the new three tier pension scheme is indeed an effective scheme because of it delivers on its promise of higher pension benefits for its current contributors. It was also proven that the scheme is more accountable and transparent than the SSNIT scheme that pre-dated it. Unfortunately, although many Ghanaian workers especially those belonging to the financial sector are aware of the new scheme, they do not understand its current structure, the role of the new players and exactly how high pension benefits under the new scheme can be obtained. It is therefore the duty of the National Pensions Regulatory Body to set up efforts in educating the public on the new pension scheme with particular focus on its new structure, the role of the new stakeholders and its benefits.
Thesis submitted to the Department of Business Administration, Ashesi University College, in partial fulfillment of Bachelor of Science degree in Business Administration, April 2013
Ghana, pension, three tier pension scheme, social security, old age