Accra: The African Centre for Retirement Research (ACRR) has put forward a proposal for a variable pension indexation model aimed at enhancing benefits for low-income pensioners and mitigating old-age poverty. Dr. Frank Odoom, the Advisory Board Chairperson of ACRR, highlighted the potential of this model to replace the existing fixed-rate system, offering improved inflation protection for retirees with lower earnings.
According to Ghana News Agency, Dr. Odoom addressed a stakeholder engagement event in Accra, organized in collaboration with the Friedrich Ebert Stiftung (FES), emphasizing the necessity of such targeted policy reforms in benefits redistribution. The event convened pension experts, policymakers, officials from the Social Security and National Insurance Trust (SSNIT), and representatives of pensioners' groups to discuss the proposed reforms and examine strategies to bolster retirement security in Ghana.
Dr. Odoom pointed out that while Ghana's three-tier pension model was well-conceived, it has not adequately tackled the income security erosion faced by low-income pensioners. He elaborated that the variable indexation model, developed through rigorous research, would address income inequality among pensioners while maintaining the financial sustainability of the SSNIT scheme. Research conducted by ACRR, involving 1,700 pensioners, has uncovered significant inadequacies in the current system.
Dr. Odoom stated, "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."
Mr. Abdallah Mashud, ACRR Research Team Lead, highlighted the current indexation model's impact, contributing to nearly 60 percent of pensioners living in poverty and underscoring the urgent need for reform. He noted that the majority of retirees found the benefits insufficient and called for a revised indexation model that accounts for full price increases and sustainable financing.
Mr. Martin Guttler, FES Country Representative, noted that pension inequality is a global issue, extending even to Germany, where FES is based. He expressed optimism that the findings would guide policies to address economic disparities among pensioners and advocated for applying the social security principle of solidarity to favor low-income earners in pension increases.
"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," Mr. Guttler stated.
