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Overview of Pensions Act 2008

The proliferation of insurance companies in Ghana provides opportunities for individuals and groups to contribute money towards education, health issues, disasters, and funerals. Insurance penetration is growing rapidly as agents aggressively market various products. The enactment of the National Pensions Act established a mandatory three-tier contributory pension scheme that requires employers and employees to make monthly contributions. Insurance companies see opportunities to benefit from the second and third tiers that allow for privately managed and voluntary pension funds.

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Anthony Ayivi
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12 views2 pages

Overview of Pensions Act 2008

The proliferation of insurance companies in Ghana provides opportunities for individuals and groups to contribute money towards education, health issues, disasters, and funerals. Insurance penetration is growing rapidly as agents aggressively market various products. The enactment of the National Pensions Act established a mandatory three-tier contributory pension scheme that requires employers and employees to make monthly contributions. Insurance companies see opportunities to benefit from the second and third tiers that allow for privately managed and voluntary pension funds.

Uploaded by

Anthony Ayivi
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Improving Insurance Industry for national development The proliferation of insurance companies in Ghana recently, seems to be an opportunity for

provident individuals and groups to contribute moneys to various schemes towards a planned and secured future. No wonder some of these companies manage to woo their clients to even contribute towards their burial and funeral, after making much gains in the areas of education, health and other calamities or disasters including fire outbreaks, burglary, accidents and floods. Patronage is improving astonishingly and agents of insurance companies keep on invading work places, markets, religious organizations and schools, like swarms of bees, in a bid to capture more clients. Some insurance products, especially those from the Life Businesses, have been so ingeniously fashioned to mimic day-to-day banking or other forms of investment in the financial sector such that it is difficult to resist their appeal. Besides, a policyholder could enjoy another benefit from an insurance product and The insured person can get loans against the security of insurance policy from an insurance company or from banks, says Mr. Akwasi Boakye, a Marketing Representative of Donewell Life Company. The penetration of the market by insurance companies would perhaps deepen with the enactment of the National Pensions Act, 2008(ACT 766) into law, with its mandatory three-tier contributory pension scheme. The main objective of the three-tier scheme is to provide for pension benefits that will ensure retirement income security for the worker. The first tier basic national social security scheme, which incorporates improved Social Security and National Insurance Trust (SSNIT) benefits, is mandatory for all employees in both the private and public sectors.

The second tier occupational pension scheme, which is mandatory for all employees but managed privately, has been fashioned to give higher lump-sum benefits for contributors that are higher than that made available either by SSNIT or under the CAP 30. As for the third, it is a voluntary provident fund and personal pension scheme, which is supported by tax benefit incentives for workers in the formal sector who want to make voluntary contributions to enhance their pension benefits and for workers in the informal sector. The employer will make a monthly contribution of 13 per cent of a worker s salary whilst the worker will make a contribution of five-and-a-half per cent making it a total of 18-and-a-half per cent of workers salary as mandatory contribution towards the pension. Out of the total contribution of 18-and-half per cent, the employer will remit 13 and half percent to the first tier mandatory basic national security scheme and five percent to the mandatory second tier occupational pension scheme. Contributions made to the third voluntary tier have no fixed level, as the contributions would depend on the individual s ability to pay.

Insurance companies would especially be interested in the prospects that both the second and third tiers make available in the market and they are expected to cash in on such opportunity.

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