Assistant Manager Corporate Affairs at the Western Regional office of the National Pensions Regulatory Authority (NPRA), Mr Seth Sackey has stated that it is never too early to start saving when it comes to retirement planning and that waiting to start saving can have a major impact on one’s retirement.
He explained that the more you invest and the earlier you start means your retirement savings will have that much more time and potential to grow and for that matter by investing early and staying invested, you may be able to take advantage of compound earnings.
“By investing in a retirement plan, you can get even more benefit from the power of compounding with tax-deferral. Your retirement account has the potential to grow faster because the money you would have paid in taxes on earnings each year remains in the account and can earn additional money”, he stated.
Speaking in an interview, Mr Sackey indicated that the informal economy sector in Ghana is considered to be the largest economy employing about 80 – 85% of the Ghanaian workforce, however, their participation in a formal pension scheme arrangement was very limited causing most of them to live below the poverty line in their old age.
He said the scheme provides a secured and regular source of income for contributors on retirement thereby making them financially independent as they would be relieved of the burden of being taken care of by the children or the family.
He enlightened that the scheme was flexible and allows contributors to contribute according to their financial strength.
He disclosed that the introduction of the 3-Tier Pension Scheme established by the National Pensions Act 2008 (Act 766) as amended has made a provision for a formal pension scheme for workers in the informal sector to ensure retirement income security at their old age and therefore implored them to take advantage of it to make their old age livable.
According to him, the introduction of the Personal Pension Scheme meant that all informal economy sector workers like farmers, fishermen, commercial drivers, traders, artisans and all the self-employed persons who in the past had no access to any pension scheme could now participate in a pension scheme just like the formal sector workers.
Mr Sackey announced that workers in the informal economy sector can join the scheme in two ways such as individuals or as groups and added that individuals who want to participate in the scheme would have to join a registered Personal Pension Scheme administered by Corporate Trustees licensed by the NPRA.
Group participation involves associations or organized groups such as the Ghana Association of Garages forming a pension scheme known as the “Ghana Association of Garages Group Pension Scheme” and making consistent contributions to the scheme.
Mr Sackey explained that the provision of guaranteed income will enable contributors to live a decent life and improve their living standards during retirement or old age and therefore called on the workers of the informal sector to embrace the scheme to make their retirement better.
He said contributors of Personal Pension Scheme or Group Personal Pension Scheme would be entitled to a lump sum benefit paid from the Personal Saving Account on retirement, a monthly/quarterly pension from the Retirement Account on retirement, an invalidity benefits due to physical or mental disability as well as a survivors benefits which allow beneficiaries of a deceased contributor to withdraw the accrued benefits of the deceased.