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- 5 Marks
Question
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)
Answer
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.
- Tags: Ghana tax laws, National Pension Act, Pension benefits, Pension Computation, Retirement
- Level: Level 2
- Topic: Income Tax Liabilities
- Series: DEC 2023
- Uploader: Joseph