By Francis Ntow
Accra, Oct. 24, GNA – The African Centre for Retirement Research (ACRR) has proposed a variable pension indexation model to improve benefits for low-income pensioners and reduce old-age poverty.
Dr Frank Odoom, Advisory Board Chairperson of ACRR, said the proposed model, when adopted in place of the current fixed-rate system, would offer better inflation protection for low-earning retirees.
Speaking at a stakeholder engagement in Accra, jointly organised by ACRR and the Friedrich Ebert Stiftung (FES), Dr Odoom said, “Such well-targeted benefits redistribution policy reforms have become necessary.”
The forum brought together pension experts, policymakers, Social Security and National Insurance Trust (SSNIT) officials, and representatives of pensioners’ groups to deliberate on the proposed reforms and explore ways to enhance retirement security in Ghana.
Dr Odoom noted that although Ghana’s three-tier pension model was well-intentioned, it had not sufficiently addressed the erosion of income security among low-income pensioners.
He said the variable indexation model, developed through research, would help reduce income inequality among pensioners while preserving the financial sustainability of the SSNIT scheme.
Research conducted by ACRR involving 1,700 pensioners revealed significant inadequacies in the current pension system.
“With this model, a variation-built model to cure the inequalities on the pension payroll. It will also help to improve the financial sustainability of the system, and once all those are corrected, we will be achieving the United Nations Sustainable Development Goals,” Dr Odoom stated.
Mr. Abdallah Mashud, ACRR Research Team Lead, said the current indexation model had contributed to nearly 60 per cent of pensioners living in poverty, highlighting the urgency for reform.
“Seven out of ten retirees identified the benefits provided under the current scheme as inadequate, with four out of every five respondents strongly agreeing that the pension indexation policy must be reformed,” he stated.
He explained that addressing income disparity required a revised indexation model that reflects full price increases and promotes sustainable financing.
Mr. Martin Guttler, FES Country Representative, said pension inequality was a global issue, including in Germany, where FES is headquartered.
He expressed confidence that the findings would inform policies to bridge economic gaps among pensioners.
Mr. Guttler called for the application of the social security principle of solidarity to redistribute annual pension increases in favour of low-income earners.
“This should mark the beginning of a useful stakeholder engagement and discussions of finding an alternative method of pension indexation. The aim must be to improve the income security of the low pensioners and thus minimise old-age poverty among pensioners,” he said.
GNA
Edited by Kenneth Sackey