Pensions set to increase by 25% in 2024

The Africa Center for Retirement Research (ACRR) is projecting that pension in payments could increase by a fixed rate of 25 percent for each pensioner in January 2024.

This projection comes as the country continues to grapple with high inflation, averaging 42 percent as of November 2023.

“Based on the provisions of Act 766, and the practice of SSNIT over the years, coupled with the economic and demographic trends in 2023, ACRR is projecting that pensions in payment could increase by at least a Fixed Rate of 25 percent for each pensioner in January 2024,” said Abdallah Mashud, Executive Director of ACRR.

The projected 25 percent increase aims to help pensioners keep pace with the country’s rising cost of living. In 2022, price inflation in Ghana averaged 31.47 percent, leading to a 19 percent fixed pension increase in 2023. However, with inflation continuing to accelerate in 2023 and averaging 42 percent year-to-date as of last month, retirees have struggled to make ends meet.

“There is a need for stakeholders to ensure that pensions are not reviewed based on discretion or on an ad hoc basis, but must be based on economic development in each year and in conformity with provisions of the legislation,” Mr. Mashud said. “In particular, and as best practices require, pension increment rates must be in lock-step with the general changes in prices of goods and services (inflation).”

In addition to across-the-board pension increases, ACRR is also calling for the minimum pension payment to be raised. Currently at GH¢430.58 per month, the minimum pension amount represents 60 percent of Ghana’s national poverty threshold.

“To practically sustain the economic welfare of pensioners, the government, represented by the Ministry of Employment and Labour Relations and Pensions, together with the NPRA must see to it that SSNIT increases the minimum pension come January next year, in line with the current global trends and best Social Security Administration practices,” Mr. Mashud urged.

ACRR suggests that deliberate policy measures are needed to improve benefits to low-income retirees and prevent growing inequality between rich and poor pensioners. Indexation rates should aim to redistribute pension wealth to protect economically vulnerable groups.

“Generally, if the level of benefits provided by a pension system is insufficient in terms of minimum living standards, or are not deliberately designed to protect the poor, the efforts to reduce old age poverty will be jeopardised,” he warned.

The projected 25 percent pension increase in 2024 would be the highest in recent years for Ghanaian retirees. ACRR says a significant boost is essential to prevent retirees falling further behind rising prices. The centre also hopes an inflation-matching increase and minimum pension hike can help address inequality within the pension system.

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