CEO of the National Pensions Regulatory Authority (NPRA), John Kwaning Mbroh, has made assurances regarding the future stability of the Social Security and National Insurance Trust (SSNIT).
The reassurance comes in the wake of a concerning valuation study by the International Labour Organisation (ILO), which projected a complete depletion of SSNIT’s reserves by 2036 if no corrective measures are taken.
The ILO report highlighted that, beginning in 2029, SSNIT’s total income—including contributions, investment income, and other revenue streams—would be insufficient to cover annual expenditures, leading to a depletion of reserves by 2036.
This alarming forecast primarily attributes the looming financial instability to delayed payments by the government, which constitutes a significant portion of SSNIT’s total indebtedness. As of December 31, 2021, the government owed SSNIT GH¢6.9 billion, representing 73.7% of the total GH¢9.35 billion in arrears.
Mr Mbroh speaking during an interview on PM Express and addressing these concerns, emphasized the proactive nature of the ILO’s projections, designed to anticipate future scenarios and prompt preemptive actions to safeguard the scheme.
“The report is forward-looking, ILO always projects potential outcomes to ensure we continue to improve the financial sustainability of the scheme over a long period,” he noted.
The NPRA CEO outlined several measures already in place aimed at bolstering the scheme’s financial health. Central to these measures is a stringent review of SSNIT’s investment policies.
Mr Mbroh underscored the importance of revising investment asset classes to ensure economic viability, thereby breathing new life into the scheme. Additionally, administrative expenses are under rigorous scrutiny, with significant expenditure rationalization efforts already undertaken.
Enforcement actions are also being ramped up to ensure timely contributions from companies. Mr Mbroh highlighted recent government efforts, including a substantial injection of GH¢2.6 billion, to address the arrears and enhance the scheme’s liquidity.
“We are stepping up enforcement actions to ensure companies pay their contributions on time, the government, as the largest employer, is also ensuring timely payments,” he said.
In a broader context, SSNIT’s Chief Actuary, Joseph Poku, provided historical perspective on the ILO’s projections. He recounted previous instances, such as a 2011 report predicting a funding shortfall by 2019, which did not materialize.
“The report (2011) predicted that without increased contribution rates, the funds would be insufficient by 2019. Yet, we have never defaulted on payments or benefits from 2019 to date,” Mr Poku remarked.
This track record of resilience underscores the scheme’s capacity to navigate predicted challenges through adaptive measures.
Mr Poku further reiterated the importance of these actuarial studies, conducted every three years by law, in providing a comprehensive overview of the scheme’s status, assets, and liabilities. He emphasized that these projections serve as a critical tool for identifying potential risks and implementing strategic interventions to mitigate them.
Norvanreports