The International Labour Organisation (ILO) has predicted that the reserves of the Social Security and National Insurance Trust (SSNIT) are going to be completely depleted by 2036.
According to ILO, total income including contributions, investment income, and other income, will no longer be sufficient to pay for annual expenditures including benefit payments to pensioners by 2029.
“Starting in 2029, total income (contributions, investment income and other income) is no longer sufficient to pay for annual expenditures.
“The reserve starts to decrease. During the year 2036, the reserve drops to zero” the research emphasised.
SSNIT having no other means of payment will depend on the reserves it has to meet the payment demand leading to the start of the depletion process.
This is likely to continue till 2036 when the reserve will drop to zero as stated by the valuation report.
The reserve ratio, which is the end-of-year reserve over the annual expenditures for the year, moves from 3.4 to 0 between 2021 to 2036.
This means the scheme can no longer pay pension benefits if there are no contributions, no investment income and no other income.
Details of the valuation report indicated that the critical cause of this development is the delay in payment by the government.
Of the GH¢9.35 billion total indebtedness to SSNIT as of December 31, 2021, 73.7% translating to GH¢6.9 billion was due to late payments of contributions by the government.
This leads to a 1.3 per cent drop in expected returns on investment made by SSNIT, the report emphasised.
According to the study, “Past experience suggests that, by not paying on time and not paying the interest income on delayed contributions, the Government shifts an important part of the cost to the private sector”.
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