Ghana’s pension adjustment policy is deepening income inequality among retirees and threatening system sustainability, a new study by the Africa Center for Retirement Research warns.
The Africa Center for Retirement Research (ACRR) analysis shows that Ghana’s pension adjustment method, which awards the same fixed rate of increment to all pensioners regardless of income level, disproportionately benefits high income retirees while offering little financial protection to low earners. According to the report, this practice is worsening poverty among older Ghanaians and undermining the social security scheme’s fiscal balance.
Abdallah Mashud, head of the ACRR research team, said the current indexation policy fails to protect the poor and puts pressure on the financial sustainability of the pension system.
“Reform is urgently needed to ensure equity and adequacy,” Mashud said.
The study, which surveyed 1,700 pensioners across all 16 regions, revealed that three in every five Ghanaian pensioners live below the poverty line, struggling to survive on less than two dollars a day. More than 70 percent of respondents said their current benefits are insufficient to meet daily expenses, while 78 percent believe the pension indexation policy does not reflect real cost of living increases.
The ACRR notes that although the minimum pension value has increased periodically since 2000 and even doubled in some years, such as 2013 and 2014, the overall impact on poverty reduction remains limited. The current minimum pension, pegged at 300 cedis per month, is considered grossly inadequate given inflationary pressures and rising living costs.
The existing indexation method lacks an inflation adjustment mechanism and fails to account for the financial vulnerabilities of low income retirees. Awarding a uniform fixed rate to both privileged and poor pensioners ignores income disparities and exposes the Social Security and National Insurance Trust (SSNIT) to inflationary risks, Mashud warned.
The report highlighted that this approach has led to financial stress within the SSNIT scheme, as benefit adjustments are not aligned with revenue growth or actuarial projections. ACRR’s findings further cited the last three actuarial valuation reports from 2014, 2017, and 2020, which all raised concerns about the scheme’s medium to long term solvency if reforms are not implemented.
Speaking at the Friedrich Ebert Stiftung (FES) ACRR stakeholder engagement on Alternative Pension Indexation Models held in Accra, experts, trade union representatives, and policymakers agreed that Ghana’s pension policy requires a comprehensive overhaul. Participants recommended a differentiated indexation system that ties benefit adjustments to inflation trends and wage growth, a model already adopted by several Organisation for Economic Co-operation and Development (OECD) countries.
Mashud emphasized that such a reform would not only reduce old age poverty but also strengthen social protection and restore confidence in Ghana’s pension administration. Ghana must transition toward a more progressive and fiscally responsible indexation policy that balances adequacy and sustainability, he noted.
Experts are urging the Ministry of Employment and Labour Relations, SSNIT, and the National Pensions Regulatory Authority (NPRA) to implement the recommendations of past actuarial reports and establish a clear framework that aligns pension adjustments with macroeconomic indicators such as inflation, GDP growth, and wage trends.
