Mr Emmanuel Dagadu, the Corporate Affairs Manager of the National Pensions Regulatory Authority (NPRA), said the informal sector constituted about 85 per cent of the country’s workforce yet they seemed miserable in their old age because of the lack of financial stability.
He said: “You pay your tithe, buy the clothing but remember to invest in your future”.
Mr Dagadu was speaking during NPRA’s outreach programme on the three- tier Pension Scheme for the Informal Sector Workers at Takoradi, the Western Regional Capital.
“A pension is money given to you monthly after your retirement from work. It is a form of social insurance which provides a source of regular income to live on when you retire. It is one of the most effective ways to save money for retirement,” he said.
He said the three-tier pension was a new contribution comprising two mandatory schemes and a voluntary scheme.
The first tier is a mandatory basic National Social Security Scheme which incorporates an improved system of SSNIT benefits for all employees in both the private and public sectors.
The second tier is the Occupational (or work-based) pension scheme mandatory for all employees but privately managed and designed primarily to give contributors higher lump sum benefits than previously available under SSNIT pension scheme.
The third tier is the voluntary Provident Fund and Group/Personal Pension Schemes supported by tax benefit incentives providing additional funds for workers in the formal and informal sectors who want to make voluntary contributions to enhance their pension benefits.
Mr Dagadu said workers in the informal sector were included in the new three-tier pension scheme to enable them to save towards their old age or even in times of ill health.
This, he said, would help improve their living standards and secure them financial autonomy and independence in their old age.
Under the scheme a special provision has been made to cater for the peculiar needs of workers in the informal sector who constitute the majority of workers in the country.
He said the informal sector workers were allowed to contribute any amount they could afford on monthly or regular basis adding; “it must be emphasised that the benefits that will accrue will depend on how much contribution is made and the returns on investments.The more the amount contributed, the bigger the benefits.
The informal sector contributors would have two accounts: a retirement account to provide benefits on retirement, and a personal savings account with rules for withdrawals before retirement for education and business enhancement.
According to the NPRA, there are Corporate Trustee companies licensed to establish personal pension schemes or group pension schemes while individuals can also set up their own schemes and seek technical advice or outsource administration and other technical work to third party administrators.