Question Tag: Retirement

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  • 5 Marks

PT – April 2022 – L2 – Q2d – Pension Entitlement Calculation

Compute the monthly pension entitlement of Mrs. Akoto based on her salary and months of contribution.

d) Mrs. Akoto has been engaged by Madane Ltd as the Marketing Manager for 30 years on an annual salary of GH¢20,000.
The following information relates to Mrs. Akoto:
i) Throughout her working life, she earned her best salaries from Madane Ltd.
ii) She has 408 months’ contribution to her credit.
iii) She retired on 31 March 2020 at the age of 60.

Required:
Compute her monthly pension entitlement.
(5 marks)

d) Computation of Mrs. Akoto monthly pension entitlement: Best 36 months (3 years) average salary * Pension right
Determination of best 3years average salary:
Best 3 years average salary = (20,000*3)/3 = 20,000
Determination of pension right:
37.5% + (408 months-180 months) * 0.09375 = 58.88%
Annual pension entitlement = 20,000 * 58.88% = 11,776
Monthly pension entitlement = 11,776/12 = GH¢ 981.33

  • 5 Marks

PT – July 2023 – L2 – Q2d – Income Tax Liabilities

Explanation of the basis for calculating pension benefits under the National Pensions Act, 2008 (Act 766).

Explain the basis for calculating pension benefits under the National Pensions Act, 2008 (Act 766). (5 marks)

The basis for calculating pension benefits under the National Pensions Act, 2008 (Act 766) includes the following key parameters:

  1. Age at Retirement:
    • The retirement age can be full retirement (60 years or more) or reduced pension (between 55 and 60 years).
  2. Number of Months Contributed:
    • The number of months of contributions to the scheme prior to retirement, with a minimum of 180 months of contributions required.
  3. Earnings or Salaries:
    • Pension benefits are calculated based on the best three years or 36 months of basic salaries on which contributions were paid.
  4. Pension Right:
    • The pension right starts at 37.5% for 180 months of contributions and increases by 0.09375% for every additional month of contributions beyond 180 months, up to a maximum of 60%.
  5. Early Retirement Reduction Factor:
    • For reduced pensions (before age 60), a reduction factor is applied to ensure that early retirement benefits are actuarially equal to full retirement benefits.
  • 5 Marks

PT – Dec 2023 – L2 – Q2c – Income Tax Liabilities

Compute pension benefit and monthly pension pay based on provided salary and pension contributions.

Mr. John Romeski worked for Aligidon Company Ltd for 25 years and retired at the age of 60. In the last 3 years of his working life, he earned annual salary as follows:

Year Annual Salary (GH¢)
58th 93,000
59th 96,000
60th 99,000

He has 300 months’ contribution to his credit.

Required:

Assuming he retired under the National Pension Act, 2008 (Act 766), compute his pension benefit and his monthly pension pay. (5 marks)

Pension = Three years average salary x pension right x early retirement reduction factor.

Three years average salary = (93,000 + 96,000 + 99,000) ÷ 3 = GH¢96,000.

Pension right:

  • Minimum right: 37.5%
  • Additional percentage: (300 months – 180 months) x 0.09375 = 11.25%
  • Total pension right: 48.75%

Early retirement reduction factor: Mr. Romeski retired at age 60, so there is no reduction factor.

Pension = 48.75% x GH¢96,000 = GH¢46,800.

Monthly pension pay = GH¢46,800 ÷ 12 = GH¢3,900.

  • 15 Marks

BCL – Nov 2016 – L1 – Q4a – Alternative Forms and Constitutions of Business Organisations

Determine whether partners remained after notice of retirement under the Incorporated Private Partnership Act, 1962 (Act 152).

By a letter dated 18th February 2014, addressed to the Manager of their partnership firm, Kofi Nti informed the Management of his and Mrs. Obeng’s immediate retirement as partners. The Manager replied that their application was under consideration. However, by another letter dated 12th January 2015, Mr. Kofi Nti and Mrs. Obeng withdrew their letter dated 18th February 2014. The conduct of the remaining partners, however, showed that they considered the letter of 18th February 2014 to be of no effect, and continued the partnership accordingly. A dispute later arose and Jeff, one of the partners, obtained an order of the High Court directing Mr. Kofi Nti and Mrs. Obeng to submit themselves to arbitration in accordance with the partnership agreement. The arbitrator submitted to the court that by their letter dated 18th February 2014, Mr. Kofi Nti and Mrs. Obeng ceased as from that date to be partners as the said letter could not be recalled.

Required:
Explain whether by the provisions of the Incorporated Private Partnership Act, 1962 (Act 152), Mr. Kofi Nti and Mrs. Obeng remain partners in the firm after their letters of 18th February 2014 and 12th January 2015.

Under the provisions of the Incorporated Private Partnership Act, 1962 (Act 152), the following points apply to the scenario:

  1. Notification Requirement: Upon the retirement of a partner, the remaining partners must, within 28 days, notify the Registrar of Companies of the fact, as required by Section 7 of the Act.
  2. Registrar’s Duty: The Registrar is then required to amend the certificate of registration of the company and insert a notice in the Gazette signifying the change.
  3. No Compliance with Statutory Requirements: The remaining partners did not notify the Registrar of Companies following the letter of 18th February 2014. As a result, the original certificate of registration with the names of all the original partners remains unaltered.
  4. Conduct of the Partners: The conduct of the remaining partners showed that they treated the letter of 18th February 2014 as of no effect. By their actions, they seemed to agree that the letter should be ignored, and continued the partnership accordingly.
  5. Legal Standing of Partners: Due to the lack of compliance with the statutory requirements, and the conduct of the remaining partners, Mr. Kofi Nti and Mrs. Obeng remained partners in the firm after 18th February 2014. The letter of 12th January 2015, attempting to withdraw the previous letter, does not alter this fact.

Conclusion: Based on the provisions of the Incorporated Private Partnership Act, 1962 (Act 152), and the conduct of the remaining partners, Mr. Kofi Nti and Mrs. Obeng remained partners in the firm after their letters of 18th February 2014 and 12th January 2015.
(15 marks)

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