tional Pensions Act is the seven hundred and sixty-sixth Act (Act 766) of the Parliament of the Republic of Ghana that was passed in 2008. The Act provides for pension reform in the country by the introduction of a contributory three-tier pension scheme; the establishment of a National Pensions Regulatory Authority (NPRA) to oversee the administration and management of registered pension schemes and trustees of registered schemes, the establishment of a Social Security and National Insurance Trust (SSNIT) to manage the basic national social security scheme to cater for the first tier of the contributory three-tier scheme, and to provide for related matters.

The contributory Three-Tier Pension Scheme is the new pension scheme that was introduced into the country following the promulgation of the National Pensions Act, 2008 (Act 766). The Three-tier pension scheme consists of:

1. A mandatory basic national social security scheme;
2. A mandatory fully funded and privately managed occupational pension scheme; and
3. A voluntary fully funded and privately managed provident fund and personal pension scheme

The contributory three-tier pension scheme is managed as follows:

1. The First Tier basic national social security scheme is managed by a restructured SSNIT
2. The Second Tier Occupational Pension scheme and Third Tier Provident Fund and Personal Pension schemes are managed by approved trustees licensed by the National Pensions Regulatory Authority (NPRA)
3. Approved trustees are assisted by Pension Fund Managers and Custodians licensed by the Securities & Exchange Commission (SEC) and registered by the NPRA

Yes, a contributor under the National Pensions Act enjoys the following tax benefits:

1. a) An employer or employee shall not pay income tax in respect of contributions to the basic national social security scheme and mandatory occupational pension schemes
2. b) Contributions not exceeding sixteen and one half per centum of a contributor’s monthly income, made by either a contributor or the contributor’s employer or both to a provident fund or personal pension scheme shall, be treated as tax deductible income, for the purpose of income tax for the contributor and the contributor’s employer to the extent of their respective contributions
3. c) Tax is not payable on the benefits received under Act 766
4. d) Investment income including capital gains from the investment of scheme funds shall for the purposes of income tax be treated as deductible income
5. e) A withdrawal of all or part of a contributor’s accrued benefits under a provident fund or personal pension scheme on or after retirement shall be tax exempt
   

it shall, however, be subject to the appropriate income tax for contributors in the formal sector, who withdraw their benefits before ten years of contribution and before retirement.

Yes, an employer is permitted to choose its own pension Fund Manager and or Custodian ONLY if the scheme is an Employer-sponsored Scheme. However, if the scheme is a Master Trust Scheme, then the corporate trustee has the responsibility of choosing the pension fund managers and custodian.

A worker/contributor may withdraw his/her accrued benefits under the Third Tier under the following conditions:

1. A member who has attained the retirement age is entitled to the entire accrued benefits in the scheme in the form of a lump sum.
2. A member who has not attained retirement age may withdraw all or part of the member’s accrued benefits from a scheme:
   
3. after ten years from the date of first contribution in the case of the Provident Fund or Personal Pension Scheme for contributors in the formal sector;
   
4. after five years from the date of first contribution in the case of Personal Pension Scheme for contributors in the informal sector;
   

• following certification by a medical board that the contributor is incapable of any normal gainful employment by virtue of physical or mental disability.

3. The beneficiaries of the estate of a deceased contributor may withdraw the accrued benefits of the deceased from the scheme.

No, it is the responsibility of the employer to select the trustee to manage the Second Tier mandatory Occupational Pension Scheme on behalf of its workers.

It is a multiple-employer scheme that allows different employers and their workers to join and is normally administered by a corporate trustee in line with the scheme rules approved by NPRA.

GLICO Pensions has two Master Trust Schemes with a large number of employers contributing to the schemes. Please refer to our products.

A Trust is an arrangement involving normally three parties of which one party entrusts the property/assets to another party to be transferred to the third party (beneficiary) at a point in time or a specified period.

What is the Qualifying Age for a Person to Join the National Basic Social Security Scheme?

A member of a scheme who ceases to be an employee shall elect to have the member’s accrued benefits transferred to another scheme in accordance with the regulations of the scheme.

It is an individual or corporate entity that holds property/assets on behalf of another person normally known as the beneficiary.

Contributions to the Three-tier Pension Scheme are as follows:

1. An employer of an establishment shall deduct from the salary of every worker in the establishment immediately at the end of the month, a worker’s contribution of an amount equal to five and half per centum (5.5%) of the worker’s salary for the period, irrespective of whether or not the salary is actually paid to the worker;
2. An employer of an establishment shall pay for each month in respect of each worker, an employer’s contribution of an amount equal to thirteen per centum (13.0%) of the worker’s salary during the month;
3. Out of the total contribution of eighteen and a half per centum (18.5%) an employer shall within fourteen days from the end of each month transfer the following remittances to the mandatory schemes of each worker:
   
4. Thirteen and half per centum (13.5%) to the First Tier mandatory basic national social security scheme; and
   
5. Five per centum (5%) to the second tier mandatory Occupational Pension scheme
6. Out of the total contributions of thirteen and half per centum transferred to the First Tier mandatory basic national social security scheme, two and half per centum (2.5%) shall be deducted and transferred to the National Health Insurance Fund;
7. The minimum contribution is eighteen and half per centum of the approved monthly equivalent of the national daily minimum wage;
8. Total contributions by employer and employee to the Third Tier scheme are tax deductible up to sixteen and a half per centum (16.5%) of employee’s gross month salary.