Ghana’s pension system is failing to provide adequate retirement security as low wages, restrictive investment policies and economic pressures create a perfect storm for workers and retirees alike.
The alarming reality emerged during a frank discussion on Asaase Radio’s Breakfast Show featuring pension regulators, fund managers and retiree advocates.
“The fundamental problem is that pensions mirror earnings,” said Hayford Atta Krufi, former CEO of the National Pensions Regulatory Authority. “With Ghana’s low salary structure, mandatory 18.5% contributions from small paychecks simply can’t generate meaningful retirement benefits.” His comments highlighted a systemic challenge where nearly half of Social Security and National Insurance Trust contributors earn less than 1,000 cedis monthly, resulting in pension payments below 300 cedis.
Retiree representative Joe Quist painted a grim picture of pensioner struggles, revealing some members of the Government Pensioners Association receive as little as 10 cedis monthly. “We become invisible once we retire,” Quist said. “Salary adjustments never include us, and our numbers dwindle as members die off without replacement.” The association’s membership has collapsed from over 100,000 to just 27,000.
Investment constraints compound the crisis according to Stephen Teye of IGS Financial Services. “We’re boxed into low-yield instruments like government bonds,” Teye explained. “While we seek better returns, regulatory hurdles block access to alternative assets.” Krufi confirmed that while the three-tier system allows some investment flexibility, strict caps remain on asset allocations to mitigate risk.
The discussion revealed Ghana’s pension replacement ratio falls far below the recommended 45% of working income, despite SNIT’s implementation of minimum pension floors. Panelists agreed urgent reforms are needed to address both contribution adequacy and investment policies as economic pressures mount. “This isn’t just about numbers,” Krufi concluded. “It’s about ensuring dignity in retirement for all Ghanaians.”
