You are here: HomeNews2015 05 28Article 359958

General News of Thursday, 28 May 2015

Source: Daily Guide

Gov’t chops pension cash

The Minister of Employment and Labour Relations, Haruna Iddrisu yesterday told Parliament that the government has borrowed a whopping GH¢1.3 billion from the Pension Fund and will be paying the money back through the issuance of bonds.

He said the government currently owes the basic first-tier pension run by the Social Security and National Insurance Trust (SSNIT) to the tune of GH¢288 million, adding that there is an outstanding GH¢1 billion to be paid to the mandatory second-tier being managed privately by trustees licenced by the National Pensions Regulatory Authority (NPRA) and assisted by Pension Fund Managers and Custodians.

In an answer to a question posed by Dr Anthony Akoto Osei on behalf of New Patriotic Party (NPP) Member of Parliament (MP) for Komenda/Edina/Eguafo/Abrem, Dr Ato Arthur as to the current status of the Tier 2 Pension Scheme, which has been of major concern to many Ghanaians, especially pensioners, the Minister of Employment and Labour Relations said currently the government and 12 labour unions are embroiled in a legal tussle over who has the authority to appoint a corporate trustee to manage the scheme.

According to the minister, the Judicial Service Workers Association of Ghana (JUSAG), which is part of the 12 labour unions battling the government in court over the issue, has also dragged government to the Supreme Court seeking a declaration that they (JUSAG workers) were entitled to be placed on the CAP 30 Pension Scheme per the 1992 constitution.

The Minister explained that the new National Pensions Amendment Act (2014) has corrected the formula for the computation of pensions by providing that the minimum 15 years of 180 months period of contribution entitles a member to 37.5% pension right and every additional 12 months contribution entitles a member to 1.125% pension right up to a maximum of 60%.

“The amendment has introduced a new class of benefit called Emigration Benefit to be paid in the form of lump sum to non-Ghanaian members of the Social Security Scheme under Act 766 who have retired and are leaving Ghana for good.”

When the NPP MP for Effutu, Alex Afenyo-Markin asked the minister what specifically the government used the pension money for, he could not answer but said the government borrowed the money in the face of the current challenges to support its fiscal needs.

“Mr. Speaker, it is normal for government all over the world to rely on Pension Fund to finance certain critical projects because it is patient fund,” he said, stressing that the government was ready to repay the money through the issuance of bonds.

The NPP MP for Old Tafo, Dr Akoto Osei, who asked the question on behalf of the NPP MP for Komenda/Edina/Eguafo/Abrem, said the issue of government using pension money in its expenditure is a serious one because the law does not allow that.

Even when the money is borrowed, is the government ready to pay interest on the money which should be mandatory at the prevailing Treasury bill rate of more than 25 percent, he quizzed.