Knowing how your how SSNIT retirement (pension) benefit is calculated as an employee is important. But can you do a near accurate calculation of your SSNIT retirement benefit?
What can be frustrating than not knowing how to calculate your benefits to be paid by SSNIT when you are about to retire from active service as a worker?
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Workers who have retired and gone through the process can tell the uncertainty that clouds the process.
When you retire earlier than expected or at age 60 your SSNIT contributions (Tier 1 and Tier 2) which are compulsory contributions will have to be paid back after the approved retirement benefit calculations are made by SSNIT based on your monthly income whiles you were working.
But how does SSNIT calculate your retirement income due to you at the age of retirement? Being calculated objectively and in accordance with the law governing it.
Although SSNIT is open and sincere with calculating what is due you, knowing how it is arrived at and the amount ahead of time can position you to ask the relevant questions.
SSNIT provides 4 types of benefits to members or contributors. These are Superannuation Pension/ Old age Pension, Invalidity Pension, Survivor’s Lump sum, and Emigration benefit.
This education article covers only the Superannuation Pension/ Old age Pension popularly knows as a retirement benefit.
Read: Check SSNIT contributions online: Simplified steps
The common logic is that those with a higher number of SSNIT contribution months are likely to earn more pension rights. This does not go beyond 80%under the PNDCL 247. The new pensions Act, Act 76 provides up to 60 pension rights.
The new Pensions Act requires that 180 months contribution should yield a “pension right” of 37.5%.
After reaching 180 months of contribution, every additional month adds an extra 0.09375% to the 37.5%
The table below gives additional details about the pension rights you accrue after 15 years of SSNIT contributions under Act 766.
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Pensions Rights for 15-25 years of contribution to SSNIT
Number of years contributed | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 |
Pension right, % | 37.50 | 38.63 | 39.75 | 40.88 | 42.00 | 43.13 | 44.25 | 45.38 | 46.50 | 47.63 | 48.75 |
Pensions Rights for 26-36 years or more of contribution to SSNIT
Number of years contributed | 26 | 27 | 28 | 29 | 30 | 31 | 32 | 33 | 34 | 35 | 36& above |
Pension right, % | 49.88 | 51.00 | 52.13 | 53.25 | 54.38 | 55.50 | 56.63 | 57.75 | 58.88 | 60.00 | 60.00 |
2020 = GH¢26,000
2019 = GH¢25,800
2018 = GH¢24,600
SSNIT finds the average of the three highest years of contribution
Thus GH¢24,000. (GH¢26,000+ GH¢25,800+ GH¢24,600)/3 = GH¢ 25467
Let us apply the SSNIT formulae for calculating pensions under Act 766.
We plug in the following
The additional years of contributions after the first 15 years which give us [(35 x 12 years) – 180 months] x 0.0009375
= 0.375 + [(35 x12) – 180] x 0.0009375
= 0.6 or 60%
Your pension pay due you from SSNIT would be
= average of the three best years contribution x 0.6 = GH¢
= GH¢ 25467 x 0.6 = GH¢ 15280.2
The monthly pension would be GH¢ 15280.2/12 = GH¢ 1273.35
Retirement is not an event but a process. This means you must commence the process once you are due for retirement. SSNIT has encouraged all those nearing retirement ages to visit any SSNIT branch to ascertain if there are any issues that need to be corrected prior to retirement to avoid unnecessary delays in the processing of retirement (pension) benefits.
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There saying “Yesterday is history, tomorrow is a mystery, today is the present is a fact. This knowledge shared should make us all ask the relevant questions. Are we getting ready for retirement and what do we need to know about our retirement? Just in case you want to become the true meaning of a generational billionaire and want your insurance policy to give you a full-time job or passive income, talk to us or WhatsApp.
Source: Wisdom Hammond | Ghanaeducation.org
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