The Social Security and National Insurance Trust (SSNIT) has said the unfavourable findings in the International Labour Organisation (ILO) 2020 actuarial valuation reports were based on assumptions that are yet to occur.
It has therefore urged its stakeholders not to treat the 2020 findings and projections of the report in isolation from the previous external actuarial valuation reports that had made similar findings.
“In 2011, the report says among other things that if contribution rates were not increased in the future, the annual expenditure on benefit and administration would exceed income from contributions and the funds from 2019 onwards.
“By 2019, we were not going to have enough money to pay benefits. Ladies and gentlemen, we are in 2024 and we have never defaulted on payment of benefit from 2019 up to date,” said Joseph Poku, chief actuary, SSNIT.
He was speaking at a press briefing to address concerns raised on findings in the 2020 ILO valuation reports that among other things predicted that by 2036 the reserve of SSNIT would reach zero.
He noted that such predictions were common as had been the case in 2014 and 2017.
In 2014 for instance, he said the valuation report projected annual expenditures would exceed total income (contributions, investment income and other income) in 2035 and reserve reaching zero by 2042.
“The 2017 valuation report projected that total income (contributions, investment income and other income) will no longer be sufficient to pay for annual expenditures in 2032.
During the year 2038, the reserve drops to zero when no measure is taken,” he said.
The chief actuary explained that the essence of the external valuations reports was to guide sponsors and administrators of the scheme to take necessary actions and recommendations based on the findings of the report.
He also said that SSNIT was required by law to obtain external actuarial valuation on the scheme at least once every 3 years in accordance with section Act 766, Section 53(1).
To avert the unfavourable predictions made in the reports over the years, Poku said SSNIT had embarked on initiatives to among other things increase contributions and contributors for the scheme.
These initiatives included deactivation of “ghost pensioners” from the pension payroll leading to the saving of GHC519 million; introduction of mass prosecutions as a strategy to reduce contributions in arrears and the introduction of mass registration, inspection, and contributions collection exercise to increase membership of the scheme and improve contributions collection.
He assured stakeholders that the scheme would be able to pay pensions and meet its financial obligations beyond 2036.
“Contributions of members are safe with the Trust. The Trust has not defaulted and will not default in paying benefits when they are due,” he said.
GNA