The International Labour Organisation (ILO) has projected a complete depletion of SSNIT’s reserve by 2036.
The findings emerged from an actuarial valuation study assessing the viability of the Social Security and National Insurance Trusts (SSNIT).
By 2029, the International Labour Organization (ILO) projects that the combined income, comprising contributions, investment returns, and other revenue, will fall short of covering yearly expenses, such as pension payouts.
Beginning in 2029, the aggregate income, encompassing contributions, investment proceeds, and supplementary revenue, will no longer suffice to meet annual outlays.
“The reserve starts to decrease. During the year 2036, the reserve drops to zero” the research emphasised.
SSNIT having no other means of payment will depend on the reserves it has to meet the payment demand leading to the start of the depletion process.
This is likely to continue till 2036 when the reserve will drop to zero as stated by the valuation report.
The reserve ratio, representing the end-of-year reserve divided by the annual expenditures for the year, undergoes a significant shift from 3.4 to 0 over the period spanning from 2021 to 2036.
This transition implies that the scheme becomes unable to sustain pension benefits in the absence of contributions, investment income, or any other revenue sources.
According to the valuation report, the primary factor contributing to this concerning trend is the government’s delay in making payments.
Of the GH¢9.35 billion total indebtedness to SSNIT as of December 31, 2021, 73.7% translating to GH¢6.9 billion was due to late payments of contributions by the government.
This leads to a 1.3 per cent drop in expected returns on investment made by SSNIT, the report emphasised.
According to the study, “Past experience suggests that, by not paying on time and not paying the interest income on delayed contributions, the Government shifts an important part of the cost to the private sector”.