• It is a 3-tier scheme.
• The first two are mandatory for all workers.
• The Third-Tier is a voluntary, fully-funded by members and a privately managed provident fund and personal pension scheme.
• SSNIT pays only the monthly pension of the beneficiary and the Fund Managers who manage the Second Tier with the 5% contribution rates will pay the lump sum.
• The Act is for both the public and private sector workers.
• Minimum contribution rate – 18.5% of the approved monthly minimum wage (13.5% – SSNIT 1st Tier; 5% – 2nd Tier).
• Maximum Contribution – a maximum amount will be determined by SSNIT in consultation with the NPRA periodically. Currently, the maximum contribution is on a salary of GH¢25,000.00.
• Minimum contribution period is 180 months in aggregate or 15 years.
• Entry age/Maximum Age – New minimum age is 15 years and the maximum age for a new entrant is 45 years.
• Age Exemption – those who were 55 years and above before the commencement of Act 766 were exempted from this new scheme. On the other hand, a person who is 55 years and above exempted from the Act may opt to join the scheme.
• The new scheme includes almost all the various pensions systems in the country

(Any 5 points @ 1 mark each = 5 marks)

The First Tier
This tier is a mandatory scheme that is managed by the Social Security and National Insurance Trust (SSNIT). The contribution amount due is 13.5% of the employee’s basic monthly salary. The employer pays 13% and the employee pays 0.5%. This amount is paid to SSNIT. Note that the employee gets a tax relief on the percentage he/she personally contributed — i.e. the 0.5%.

The contributions for any given month are due no later than 14 days after the end of that month. So, effectively employers will pay their previous month’s contributions to SSNIT on the 14th of every month.

The Second Tier
The second tier is also mandatory but unlike the first tier, it is managed by Private Pension Service Providers (PSPs). The contribution amount due is 5% of the employee’s basic monthly salary. This cost is borne by the employee.

The main distinction here is that the contribution is not paid to SSNIT, but rather, the employer is allowed to select their preferred Pension Service Provider. This gives employees a chance to earn higher rates of return on their investment, usually above what SSNIT offers.

The Third Tier
This is a voluntary provident fund and personal pension scheme. It is supported by tax benefits to provide additional funds for workers who want to make voluntary contributions to enhance their pension benefits.