- 5 Marks
Question
What are the features of the 3-Tier Ghana National Pension Scheme?
(5 marks)
Answer
The features of the 3-Tier Ghana National Pension Scheme are as follows:
- Three-Tier System:
It is a 3-tier scheme, with the first two being mandatory and the third tier voluntary. - Mandatory Tiers:
The first two tiers are mandatory for all workers, both in the public and private sectors. - Voluntary Third Tier:
The third tier is a voluntary, fully-funded provident fund and personal pension scheme, which is managed privately. - Contribution Breakdown:
Contributions to the scheme are split, with 13.5% going to the first tier (Social Security and National Insurance Trust – SSNIT) and 5% going to the second tier, which is managed by private fund managers. - Pension Benefits:
SSNIT pays the monthly pension, while the second-tier fund managers pay out the lump sum upon retirement. - Minimum Contribution Period:
The minimum contribution period is 180 months (15 years) to qualify for benefits under the scheme - The scheme is open to new members starting from 15 years of age, with a maximum entry age of 45 years.
- Age Exemption:
Workers who were 55 years and above before the commencement of Act 766 are exempt from the new scheme but may choose to join. - Maximum Contribution:
The maximum contribution is currently capped based on a salary of GH¢25,000, which can be adjusted periodically by SSNIT and the National Pensions Regulatory Authority (NPRA)
Maximum Age for Entry:
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(Any 5 points @ 1 mark each = 5 marks)
- Tags: National Pension Scheme, Pensions, Retirement Benefits, Social Security
- Level: Level 2
- Topic: Ghana National Pension Scheme
- Series: MAY 2020
- Uploader: Cheoli