Understanding Ghana's 3-Tier Pension System
Ghana's pension system was restructured in 2008 under the National Pensions Act (Act 766) to provide comprehensive retirement benefits. The system consists of three tiers, combining mandatory and voluntary contributions.
Tier 1: SSNIT Basic National Social Security
The first tier is managed by SSNIT and is mandatory for all formal sector employees. Combined contributions of 13.5% (5.5% employee + 8% employer goes to the pension fund, with 0.5% going to the National Health Insurance Authority).
Tier 2: Occupational Pension Scheme
This mandatory scheme is managed by licensed private pension fund managers. The employer contributes 5% of basic salary. Employees can access this fund as a lump sum at retirement or after leaving employment.
Tier 3: Voluntary Provident Fund
An optional scheme for those who want additional retirement savings. Contributions up to 16.5% (combined employee and employer) are tax-deductible, making it an attractive option for tax planning.
Contribution Cap
For Tier 1 and Tier 2, contributions are calculated on a maximum salary of GHS 61,000 per year (GHS 5,083.33 per month). Salaries above this cap are not subject to additional pension contributions for the mandatory tiers.