ADDRESS BY HONOURABLE KWADWO BAAH-WIREDU AT THE 5TH QUADRENNIAL DELEGATES CONFERENCE AT PENSIONERS’ CENTRE HO ON 6TH OF DECEMBER 2006 AT 10.00AM

Mr. Chairman,
President of Volta Regional House of Chiefs,
Togbega Afede XIV,
Togbuiwo, Mamawo,
Fellow Ministers,
Municipal Chief Executive of Ho,
Colleague MPs,
Secretary General of TUC,
The Controller and Accountant-General,
Members of the Clergy,
Invited Guests,
Members of the Press,
Distinguished Ladies and Gentlemen,
All Other Protocols Observed,

It is my greatest honour to be invited as Minister of Finance and Economic Planning to deliver a speech at the 5th Quadrennial Delegates’ Conference of the Ghana Government Pensioners.

I wish to congratulate the National Executive Council and all Ghana Government Pensioners on this occasion.

Mr. Chairman, Togbuiwo, Mamawo, Distinguished Ladies and Gentlemen. Some Pensioners depend on the consolidated fund for the payment of their benefits and it is a well-known fact that getting funds from State Coffers to pay pensions and other benefits is with difficulties and pose a challenge.

I wish to assure all Government Pensioners that the Government will continue to pay all your benefits but please bear with us when there are delays even though it may be difficult for you.

Mr. Chairman, Togbuiwo, Mamawo, Ladies and Gentlemen the expectations of the largest public sector group on wages is almost twice that of the Government’s total projected wage bill.

In the 2006 Budget the Government affirmed a plan to phase in a comprehensive pay reform over a 3-year period. This is on-going. The broad policy of Government continues to be the enhancement of wages and pensions.

To demonstrate the continued commitment to the pay reform agenda, in the 2007 Budget Government proposes to establish a Fair Wages Commission to administer the new Comprehensive Pay Structure, maintain its integrity and ensure equity on an on-going basis. Definitely, the government Pensioners will not be left out.

Mr. Chairman, Togbuiwo, Mamawo, Distinguished Ladies and Gentlemen, in response to workers agitations, President J. A. Kufuor established the Presidential Commission on Pensions in August 2004.

The Commission was charged to examine existing pension arrangements and to make appropriate recommendations for a sustainable pension scheme that would ensure retirement income security for Ghanaians with special reference to the public sector.

In the Government White Paper on the Report of the Presidential Commission on Pensions published in July 2006, the Government accepted the Commission’s recommendation for a three-tier pension structure comprising two mandatory schemes and a voluntary scheme.

The three-tier pension is to improve benefits and ensure retirement income security for Ghanaian workers.

The three-tier system is as follows:

A. FIRST TIER

(a) A mandatory Basic State Social Security Scheme to be administered by a restructured SSNIT which will pay only periodic monthly and other pension benefits (such as survivors and invalidity benefits).

(b) It will be a defined benefit scheme, benefiting from a portion of contributions paid to SSNIT by both the employee (5%) and the employer (12.5%).

(c) Under the new Scheme, SSNIT will no longer pay the 25% gratuity lump-sum.

B. SECOND TIER
(a) A mandatory, privately-managed occupational pension scheme.
(b) It will be a defined Contribution Pension Scheme, paying mainly lump-sum benefits with a flexibility that allows the contributor to purchase additional annuities to enhance monthly pension benefits.
(c) The legislated contribution should be 5%.
(d) Out of the legislated contribution 4% will be hived off SSNIT, while the remaining 1% will be contributed by the employer and the employee in equal proportions.

C. THIRD TIER

A Voluntary Private Pension Scheme to be operated in line with the provisions of the Long-Term Savings Act (LTSA) 2004 (Act 679) which inter alia offers attractive tax incentives. Existing Provident Funds and similar scheme which may want to take advantage of the third-tier would have to modify their rules to comply with the provisions of the LTSA.

Mr. Chairman, Togbuiwo, Mamawo, Distinguished Ladies and Gentlemen, the Government supports the Presidential Commission’s recommendation that with the coming into effect of the new three-tier scheme all workers currently on the SSNIT Scheme and below 55 years should automatically join the new Scheme.

Workers aged 55 years and above on the SSNIT Scheme are exempted from the new three-tier Scheme. A Project Implementation Committee has been set up by the Government to review and make appropriate recommendation in this regard.

Mr. Chairman, Togbuiwo, Mamawo, Distinguished Ladies and Gentlemen, with the coming into effect of the new pension system, no new entrants would be allowed to join CAP 30 except those presently allowed under the 1992 Constitution of Ghana.

The Controller and Accountant-General’s Department (CAGD) will continue to pay gratuities and lump-sums to whatever is left of pensionable officers in the public sector who were employed before 1st January 1972 and public servants who joined the CAP 30 Scheme thereafter. Public Sector pensioners under CAP 30 will also continue to receive their benefits under the Scheme.

Public Servants presently under CAP 30 will be given the option to decide whether or not to move onto the new structure within a given time frame.

Mr. Chairman, Distinguished Ladies and Gentlemen, the Government is of the view that any pension increase policy must protect the real incomes of pensioners, preserve equity and ensure the scheme remains sustainable.

The payment of surviving spouse benefits will be based on the income of the deceased spouse and the CAGD is to initiate action for its implementation.

Mr. Chairman, Ladies and Gentlemen, the Government will review the quantum of the allowances paid to some public sector retirees who draw monthly allowances under the General Orders 400 (GO 400 – Allowance for Non-Pensionable Officers).

The Government recognizes the importance of establishing a suitable pension scheme for the Informal Sector and will conduct a comprehensive study to facilitate the setting-up of a Social Insurance Scheme for this Sector.

Mr. Chairman, Togbuiwo, Mamawo, Distinguished Ladies and Gentlemen, the Government will consider providing certain social benefits - eg free or substantially subsidized transportation cost, free medical treatment, reduced tickets to public and social events for all senior citizens.

To conclude, may I, once again congratulate the Ghana Government Pensioners and wish you well in your deliberations.

I thank you for your attention and time.

GOD BLESS US ALL Details