THE EFFECTIVENESS OF THE CURRENT THREE-TIER PENSION SCHEME IN PROVIDING ADEQUATE SOCIAL SECURITY FOR GHANAIANS: EVIDENCEFROM THE EASTERN REGION OF GHANA

ABSTRACT

A public pension system is the only system that guarantees income security for the aged, regardless of any economic change in the future. In this regard, a pension is seen as a social and economic necessity that society should embrace in the quest to alleviate poverty and provide economic security that will enable individuals to cope with life's major risks. The purpose of the study was to investigate the effectiveness of the current tier-three pension scheme in providing adequate social security for Ghanaians. The study utilized the qualitative research method and adopted purposive and convenience sampling techniques to sample 40 public sector workers and expert managers of the new pension scheme from the Eastern Region of Ghana. The study found that the three-tier pension scheme ensures information access, bulk payments, internet communication, arbitrary withdrawal, knowledge on pension entitlements, accumulation of income, and the ability of workers to appoint their own fund managers. It was also observed that the introduction of common IT interface which operates across the three-tier pension system has helped in curtailing some of the biases, inconsistencies, fraud, and agitation that were associated with the old schemes. This has also given the opportunity for workers to channel their grievances through an online platform for it to be resolved. The system also provides notification, an update of account and other issues relevant to the worker which were non-existing in the old schemes. The indication is that the new scheme has drawn more informal sector workers because of enormous advantages such as improved living standards for the aged; financial autonomy and independence of retirees; and the promotion of growth and development of the capital, mortgage, and insurance markets, which were hitherto not in the old scheme. However, the of lack effective coordination among the managers of the three components of the current three-tier pension scheme has caused failure in relation to the realization of the key objective of the pension schemes “Unity of Purpose” in accordance with regulations made under the National Pension Act, 2008 (Act 766). Based on the findings, there should be a continuous and effective collaboration of all stakeholders in connection with the new pension scheme in order to ensure effective working of the scheme. Additionally, public education and sensitization should be provided to ensure people understand all components of the scheme in order to increase the number of enrolment and sustainability of the scheme. Further, the implementation should provide an opportunity to use future lump sum pension benefits to secure mortgages.