SSNIT pension payments (social security) for librarians in Ghana

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Our partner CESRUD's library coordinator Paul Ayutoliya explained in simple terms how the pension works.  I thought it was interesting.

On the issue of SSNIT and Tier 2. The laws of Ghana concerning SSNIT contributions demands that an employee of any set-up or organization contributes 5.5% of his/ her salary or income as his/ her ssnit contributions whiles the employer on the other hand contributes 13% of the salary or income of the employee to ssnit as part of the employee ssnit contributions. The total contribution in terms of percentage per every employee to ssnit currently is 18.5%. So for instance Paul an employee of Cesrud/ Favl earns 300 cedis a month. Paul is expected to pay to ssnit 5.5% of the 300 cedis (5.5%@GHC300= GHC16.50) as his contributions whiles his employer Cesrud/ Favl will also add or pay 13% of the 300 cedis (13%@GHC300=GHC39) to ssnit as part of Paul's ssnit contributions. Paul's total contribution to ssnit would amount to GHC 55.50 (16.5+39=GHC55.50) being the total percentage of 18.5% (5.5+13=18.5%). So when ssnit receives the total of 18.5% contributions, what happen next? SSNIT will normally divide this 18.5% into two (2); 13.5 of 18.5% is Tier 1 which is manage by ssnit itself and the 5 of the 18.5% left is Tier 2 which is also manage by a different fund manager.  So SSNIT receives tier 1 and tier 2 goes to your fund manager, so even if ssnit receives the 18.5%, what ssnit manages is only the 13.5 whiles the 5 remaining would normally be paid to a different fund manager. So in the example above, ssnit will accept or receive (13.5/18.5@55.50=GHC40.50) while the (5/18.5@55.50=GHC15.00) will be paid to tier 2 fund managers. SSNIT used to accept all the 18.5% take their part and gives the rest to a tier 2 fund manager on behalf of the contributors but effective June or so last year SSNIT informed all contributors to look for their own tier 2 fund managers since they were no longer going to accept tier 2 on behalf of anyone because they are not the direct people managing those funds. Contributors were and /or are now to look for their own fund managers of their tier 2 contributions. So I have since contacted Cold Coast Security a financial institution which also manages tier 2 which was recommended to me by Mr. Rex Asanga to manage our tier 2 for us. Arrangements are in place to pay our tier 2 contribution. This tier 2 contribution do not attract penalty unlike the tier 1 which attracts penalties for delay in payments.

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FAVL Blog

Books, reading, and libraries relevant to Africa by Michael Kevane, co-Director of FAVL and economist at Santa Clara University.

Other contributors include Kate Parry, FAVL-East Africa director, FAVL Burkina Faso representative Koura Donkoui, FAVL Burkina Faso program manager Krystle Nanema, and FAVL friends Emilie Crofton and Elisee Sare.

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