How SSNIT will Calculate Your Monthly Retirement Pay
Do you know how SSNIT will calculate your monthly retirement “pay”?
Ghana Education News is interested not only direct education-related news but also in any relevant piece of information that will provide valuable lessons and information; hence, we are sharing this post on how SSNIT will calculate your monthly retirement “pay.” This is a write-up by Hon. Jerry Akporhor.
Read this carefully, and get informed and educated.
HERE IS HOW SSNIT WILL CALCULATE YOUR MONTHLY STIPEND AFTER RETIREMENT.
I hope by now you are aware that SSNIT no longer pays lump sum after retirement. They only pay you monthly allowances and pray that you…
1. Per the SSNIT LAW, before you qualify for voluntary retirement, you should be at least 55 years old.
2. You must have contributed for at least 15 years, minimum, and above.
3. But in any case, if you wish to retire when you’ve not yet attained the required age of 55 and a minimum of 15 years of contribution, you would only be given a lump sum of your total contribution with some interest without any monthly payment, as in your case of 51.
The amount you receive monthly after retirement is determined by,
1. Age at which you retire (either the compulsory 60 or voluntary 55).
2. Total contributions made (thus the number of years of contribution – at least 15) before you retire.
3. Your three (3) best annual salaries. (Three different years in service where you receive the highest annual salary – add them together and divide by three).
The calculation is different for compulsory and voluntary retirement. Compulsory takes the full amount, while voluntary takes a reduction of 25%.
So, to calculate compulsory retirement, you multiply the average of the three best years by something called “pension Right,” which ranges between 37.5% – and 60% for compulsory retirement.
This is how it works: For the first 15 years, every year of contribution gives you a 2.5% pension right. So, the minimum 15 years gives you 35.7%. After the 15th year, the pension right increases by 1.179% every year until it reaches 60% and stops. Every other year after that does not give you increments in pension, right?
So, these are the pension rights from 15 to 36 years. Let’s assume Hon Jerry Akporhor, the First Class Counselling Psychologist, the only Online DCE, who is a Class One teacher by choice, contributed for 31 years before considering voluntary retirement. That means his current right is 55.5% or 0.555.
37.50 38.63 39.75 40.88 42.00 43.13 44.25 45.38 46.50 47.63 48.75 49.88 51.00 52.13 53.25 54.38 55.50 56.63 57.75 58.88 60.00
Let’s say his best three years’ annual salaries are: GH¢24,000 + GH¢22,800 + GH¢21,600) / 3 = GH¢22800
Average x pension right = GH¢22800 × 0.555= GH¢12,654 annually.
Thus, his monthly pension benefit would be 12654/12 = GH¢1054.5
But, when he opts for voluntary retirement, they would now use these pension rights to reduce the annual pension benefit. 60%, 67.5%, 75%, 82.5% 90%, thus 55-59 years.
So let’s say he contributed for 31 years and above with the same best three-year average but opted for retirement at age 55, which corresponds with a 60% pension right reduction.
Average x Reduction right 12,654 x 0.6 = 7592.4
Thus, his monthly pension benefit would be 632.7 per month voluntarily, compared to 1054.5 compulsory for the same contribution period.
So you see, it’s worth waiting to hit 60 to enjoy full benefits. And it’s also worth doing everything possible to increase your salary while in service so that you can enjoy bigger pension benefits.
The higher your salary before retirement, the bigger your pension allowance after retirement.
We hope this publication on “How SSNIT will Calculate Your Monthly Retirement Pay” has been very useful to you.
Source: Hon Jerry Akporhor
