NATIONAL PENSIONS ACT, 2008 (ACT 766)
DATE OF PRESIDENTIAL ASSENT:4th December,2008.
DATE OF GAZETTE NOTIFICATION: 12th December, 2008.
AN ACT to provide for pension reform in the country by the introduction of a contributory three-tier pension scheme; the establishment of a National Pensions Regulatory Authority to oversee the administration and management of registered pension schemes and trustees of registered schemes, the establishment of a Social Security and National Insurance Trust to manage the basic national social security scheme to cater for the first tier of the contributory three-tier scheme, and to provide for related matters.
Establishment of Contributory Three-Tier Pension Scheme and National Pensions Regulatory Authority
There is established by this Act, a contributory three-tier pension scheme consisting of
(a) a mandatory basic national social security scheme;
(b) a mandatory fully funded and privately managed occupational pension scheme, and
(c) a voluntary fully funded and privately managed provident fund and personal pension scheme.
The object of the scheme is to
(a) provide pension benefits to ensure retirement income security for workers,
(b) ensure that every worker receives retirement and related benefits as and when due, and
(c) establish a uniform set of rules, regulations and standards for the administration and payment of retirement and related benefits for workers in the public and the private sector.
(1) An employer of an establishment shall deduct from the salary of every worker in the establishment immediately at the end of the month, a worker’s contribution of an amount equal to five and half per centum of the worker’s salary for the period, irrespective of whether or not the salary is actually paid to the worker.
(2) An employer of an establishment shall pay for each month in respect of each worker, an employer’s contribution of an amount equal to thirteen per centum of the worker’s salary during the month.
(3) Out of the total contribution of eighteen and a half per centum an employer shall within fourteen days from the end of each month transfer the following remittances to the mandatory schemes on behalf of each worker
(a) thirteen and half per centum to the first tier mandatory basic national social security scheme; and
(b) five per centum to the second tier mandatory occupational pension scheme.
(4) The minimum contribution is eighteen and half per centum of the approved monthly equivalent of the national daily minimum wage.
(5) Despite any agreement or understanding to the contrary, an employer is not entitled to deduct
(a) or otherwise recover the employer’s own contribution from the worker’s salary; or
(b) the worker’s contribution for an earlier contribution period from the salary in respect of a later period.
(6) An employer is entitled to make deductions under subsection (5) (b) if
(a) the failure to make the deduction was due to a false declaration made in writing by the worker at the time of employment; or
(b) the failure to deduct the contribution was the result of an accidental mistake or a clerical error in which case the deductions shall be made according to the written instructions of a designated officer of the National Pensions Regulatory Authority set up under section 5 of this Act.
(7) Where an employer deducts a contribution from the salary of a worker, the contribution shall be held by the employer in trust for the purpose of this Act until it is remitted to the relevant schemes.
(8) Subject to guidelines that may be issued by the Board, any person who is not covered under the first or second tier may make voluntary contributions under the third tier.
(9) A person to whom the first and second tiers apply may in addition to the total contributions being made by the employee and the employer, make voluntary contributions to a scheme under the third tier of the Scheme.
(10) An employer who fails to remit total contributions within the time stipulated in subsection (3) commits an offence and is liable on summary conviction to a fine of two thousand penalty units or to a term of imprisonment for two years or to both.
(1) The basic national social security scheme shall operate under the Trust established under section 32 of this Act.
(2) The occupational pension scheme, provident fund scheme, personal pension scheme and other privately managed pension schemes shall be managed by trustees approved by the Board.
(1) There is established by this Act a body to be known as the National Pensions Regulatory Authority.
(2) The Authority is a body corporate with perpetual succession and a common seal and may sue and be sued in its corporate name.
(3) The Authority may for the performance of its functions acquire and hold movable or immovable property and may enter into a contract or any other transaction.
(4) Where there is hindrance to the acquisition of property, the property may be acquired for the Authority under the State Property and Contracts Act, 1960 (C.A. 6) or the State Lands Act, 1962 (Act 125) and the costs shall be borne by the Authority.
The object of the Authority is to regulate and monitor the operation of the Scheme and ensure the effective administration of pensions in the country.
To achieve its object the Authority shall:
(a) be responsible for ensuring compliance with this Act;
(b) register occupational pension schemes, provident funds and personal pension schemes;
(c) issue guidelines for the investment of pension funds;
(d) approve, regulate and monitor trustees, pension fund managers, custodians and other institutions that deal with pensions as the Authority may determine;
(e) establish standards, rules and guidelines for the management of pension funds under this Act;
(f) regulate the affairs and activities of approved trustees and ensure that the trustees administer the registered schemes;
(g) regulate and monitor the implementation of the Basic National Social Security Scheme;
(h) carry-out research and ensure the maintenance of a national data bank on pension matters;
(I ) sensitise the public on matters related to the various pension schemes;
(j ) receive and investigate complaints of impropriety in respect of the management of pension schemes;
(k) promote and encourage the development of the pension scheme industry in the country;
(l) receive, and investigate grievances from pensioners and provide for redress;
(m) advise government on the general welfare of pensioners;
(n) advise government on the overall policy on pensions in the country;
(o) request information from any employer, trustee, pension fund manager or custodian, any other person or institution on matters related to retirement benefit;
(p ) charge and collect fees as the Authority may determine;
(q) impose administrative sanctions or fines; and
(r) perform any other functions that are ancillary to the object of the Authority.
(1) The governing body of the Authority is a Board consisting of
(a) a chairperson,
(b) the Chief Executive of the Authority,
(c) one person nominated by the President,
(d) a representative of the Ministry responsible for Pensions, not below the rank of a director,
(e) a representative of the Bank of Ghana,
(f ) a representative of the Securities and Exchange Commission,
(g) two representatives of Organised Labour
(h) one representative of the Ghana Employers’ Association,
(i) one representative of the National Pensioners Association, and
(j ) a representative of the Attorney-General and Minister for Justice not below the rank of Principal State Attorney.
(2) The chairperson and the other members of the Board shall be appointed by the President in accordance with article 70 of the Constitution.
(3) The President may, in appointing the members of the Board take into account persons with experience in the following:
(i) finance and investment,
(ii) law,
(iii) accounting,
(iv) pension management or actuarial science,
(v) business administration, or
(vi) other related areas of expertise.
(4) The Board shall ensure the proper and effective performance of the functions of the Authority.
(1) A member of the Board shall hold office for a period not exceeding three years and is eligible for re-appointment but a member shall not be appointed for more than two terms.
(2) Subsection (1) does not apply to the Chief Executive.
(3) A member of the Board may at any time resign from office in writing addressed to the President through the Minister.
(4) A member of the Board, who is absent from three consecutive meetings of the Board without reasonable excuse ceases to be a member of the Board.
(5) The President may by letter addressed to a member revoke the appointment of that member.
(6) Where a member of the Board is, for a sufficient reason, unable to act as a member, the Minister shall determine whether the inability would result in declaration of a vacancy.
(7) Where there is a vacancy
(a) under subsection (2), (3) or (4) or section 11 (2), or
(b) as a result of a declaration under subsection (6), or
(c) by reason of the death of a member the Minister shall notify the President of the vacancy and the President shall appoint a person to fill the vacancy.
(1) The Board shall meet at least once every three months for the dispatch of business at the times and in the places determined by the chairperson.
(2) The chairperson shall at the request in writing of not less than one-third of the membership of the Board convene an extraordinary meeting of the Board at the place and time determined by the chairperson.
(3) The quorum at a meeting of the Board is seven members of the Board or a greater number determined by the Board in respect of an important matter.
(4) The chairperson shall preside at meetings of the Board and in the absence of the chairperson, a member of the Board elected by the members present from among their number shall preside.
(5) Matters before the Board shall be decided by a majority of the members present and voting and in the event of an equality of votes, the person presiding shall have a casting vote.
(6) The Board may co-opt a person to attend a Board meeting but that person shall not have a voting right.
(7) The proceedings of the Board shall not be invalidated by reason of a vacancy among the members or defect in the appointment or qualification of a member.
(8) Subject to this section, the Board may determine the procedure for its meetings.
(1) A member of the Board who has an interest in a matter for consideration by the Board shall disclose in writing the nature of that interest and is disqualified from participating in the deliberations of the Board in respect of that matter.
(2) A member who contravenes subsection (1) ceases to be a member.
(1) The Board may establish committees consisting of members of the Board or non-members or both to perform a function.
(2) A committee of the Board may be chaired by a member of the Board.
(3) Section 11 applies to members of committees of the Board.
Members of the Board and members of a committee of the Board shall be paid the allowances approved by the Minister in consultation with the Minister responsible for Finance.
(1) The Board may establish regional and district offices of the Authority in each regional capital and in the district determined by the Board.
(2) A regional or district office of the Authority shall perform the functions of the Authority in the region or district that the Board may direct.
The Minister may give directives to the Board on matters of policy.
(1) The President shall, in accordance with article 195 of the Constitution, appoint a person with expertise in pensions, actuarial science, insurance or related field as the Chief Executive Officer of the Authority.
(2) The Chief Executive Officer shall hold office on the terms and conditions specified in the letter of appointment.
(1) The Chief Executive Officer is responsible for the day-to-day administration of the affairs of the Authority and is answerable to the Board in the performance of functions under this Act.
(2) The Chief Executive Officer shall perform any other functions determined by the Board.
(3) The Chief Executive Officer may delegate a function to an officer of the Authority but shall not be relieved from the ultimate responsibility for the performance of the delegated function.
(1) The President shall in accordance with article 195 of the Constitution appoint a person with the relevant academic and professional qualifications and experience in pension matters, insurance, actuarial science or other related fields as the Deputy Chief Executive Officer of the Authority.
(2) The Deputy Chief Executive Officer shall hold office on the terms and conditions specified in the letter of appointment.
The Deputy Chief Executive Officer shall
(a) perform functions that the Chief Executive Officer may assign, and
(b) act in the absence of the Chief Executive Officer.
(1) The President shall in accordance with article 195 of the Constitution appoint a Solicitor Secretary for the Authority.
(2) The Solicitor Secretary shall be
(a) responsible to the Chief Executive,
(b) the secretary to the Board,
(c) in-charge of the Legal department, and
(d) perform other functions that may be assigned to the Solicitor Secretary by the Board or the Chief Executive.
(1) The President shall in accordance with article 195 of the Constitution appoint other staff of the Authority that are necessary for the proper and effective performance of its functions.
(2) Other public officers may be transferred or seconded to the Authority or may otherwise give assistance to it.
(3) The Authority may engage the services of advisers on the recommendations of the Chief Executive Officer.
The funds of the Authority include
(a) moneys provided by Parliament,
(b) fines, fees, commissions and income accruing to the Board in the performance of its functions,
(c) donations, grants and gifts, and
(d) any other moneys that are approved by the Minister responsible for Finance.
(1) The Board shall keep books of account and proper records in relation to them in the form approved by the Auditor-General.
(2) The Board shall submit the accounts of the Authority to the Auditor-General for audit within three months after the end of the financial year.
(3) The Auditor-General shall, not later than three months after the receipt of the accounts, audit the accounts and forward a copy of the audit report to the Minister.
(4) The Internal Audit Agency Act, 2003 (Act 658) applies to this Act.
(5) The financial year of the Authority is the same as the financial year of the Government.
(1) The Board shall within one month after the receipt of the audit report, submit an annual report to the Minister covering the activities and the operations of the Authority for the year to which the report relates.
(2) The annual report shall include the report of the Auditor-General.
(3) The Minister shall, within one month after the receipt of the annual report, submit the report to Parliament with a statement that the Minister considers necessary.
(4) The Board shall also submit to the Minister any other reports which the Minister may require in writing.
The Board may engage the services of consultants or other experts on terms and conditions determined by the Board.
(1) A person in the discharge of duties under this Act shall not disclose confidential information obtained by that person unless authorised by the Board to do so.
(2) A person who contravenes subsection (1) commits an offence and is liable on summary conviction to a fine of two hundred and fifty penalty units or to a term of imprisonment of not more than one year or to both.
(1) A person authorised by the Board may, for the purpose of ensuring compliance with the provisions of this Act
(a) between the hours of 8.00 a.m. and 5.00 p.m. enter any premises in which an employer or self-employed person operates business for the purpose of inspection and examination;
(b) require a person to produce a record required to be kept under this Act in that person’s possession and inspect and make copies where necessary;
(c) make inquiries to ascertain whether the requirements of this Act are being complied with by employees and self-employed persons;
(d) seize anything which appears to be evidence of an offence against this Act; and
(e) exercise other powers that may be conferred by Regulations.
(2) Where premises are private dwellings, an authorised person may enter those premises under a warrant issued by a Court of competent jurisdiction.
The Chief Executive Officer shall not later than six months before the commencement of each financial year prepare and submit to the Board for approval
(a) a work programme containing a general description of the work and activities that the Board plans to undertake, and
(b) estimates of the Authority’s expected expenditure and income.
The Minister in consultation with the Board, may make Regulations for the effective implementation of this Part.
Basic National Social Security Scheme
(1) The basic national social security scheme shall operate under the Trust established under section 32 of this Act.
(2) Each worker of an establishment or an institution shall pay a monthly contribution to the social security scheme.
(3) Self-employed persons who opt to join the scheme shall pay a monthly contribution to the social security scheme.
Section 30 does not apply to officers and men of the Ghana Armed Forces and any other person who is expressly exempted by law.
(1) There is established by this Act a body known as the Social Security and National Insurance Trust.
(2) The Trust is a body corporate with perpetual succession and a common seal and may sue and be sued in its corporate name.
(3) The Trust may for the performance of its functions acquire and hold movable or immovable property, and may enter into a contract or any other transaction.
(4) Where there is hindrance to the acquisition of property, the property may be acquired for the Trust under the State Property and Contracts Act, 1960 (C.A. 6) or under the State Land Act, 1962 (Act 125) the cost shall be borne by the Trust.
The object of the Trust is to operate the basic national social security scheme referred to as the social security scheme and other schemes as determined by law on the recommendations of the National Pensions Regulatory Authority.
To achieve its object the Trust shall
(a) operate the basic national social security pension scheme and other schemes as may be prescribed by law;
(b) have a Fund into which shall be paid the contributions and any other moneys as may be required under this Act;
(c) be responsible for the general administration of the social security scheme and regulations made under it;
(d) ensure the provision of social protection for the working population for various contingencies including old age, invalidity and death;
(e) be responsible for the administration and investment of funds within the framework of general directives issued by the Board of Trustees and approved by the Authority;
(f) collaborate with other complementary social protection schemes in respect of specified operational and administrative functions to achieve efficiency, cost savings and avoidance of duplication of functions;
(g) have general control of the funds and investments of the social security scheme and the management of the Trust; and
(h) perform any other functions that are ancillary to the objects of the Trust.
(1) The governing body of the Trust is a Board of Trustees consisting of
(a) a chairperson,
(b) two persons nominated by the President, at least one of whom is a woman,
(c) two representatives of Employers’ Associations,
(d) four representatives of Organised Labour,
(e) one representative of National Pensioners’ Association,
(f ) one representative of the Ministry responsible for Finance not below the rank of a Director,
(g) one representative of the Security Services who is not a member of the Ghana Armed Forces, and
(h) the Director-General of the Trust.
(2) The members of the Board of Trustees shall be appointed by the President in accordance with article 70 of the Constitution.
(3) The Board of Trustees shall ensure the proper performance of the functions of the Trust.
(1) A member of the Board of Trustees must, in relation to the social security scheme, have knowledge and understanding of
(a) the social security law and any regulations made under it;
(b) any statement of investment policy for the time being maintained under section 67 of this Act;
(c) any other policy document for the time being adopted by the Board of Trustees relating to the administration of the scheme generally.
(2) The degree of knowledge and understanding required of the Board of Trustees is that necessary to enable the individual to perform the functions as a member of the Board of Trustees of the social security scheme.
(3) The Trust shall ensure that a member of the Board of Trustees acquires the relevant knowledge through appropriate programmes relating to pensions and trusts.
(1) A member of the Board of Trustees shall hold office for a period not exceeding three years and is eligible for re-appointment but a member shall not be appointed for more than two terms in succession.
(2) Subsection (1) does not apply to the Director-General of the Trust.
(3) A member of the Board of Trustees may at any time resign from office in writing addressed to the President through the Minister.
(4) A member of the Board of Trustees who is absent from three consecutive meetings of the Board without sufficient reason ceases to be a member of the Board of Trustees.
(5) The President may by letter addressed to a member revoke the appointment of that member.
(6) Where a member of the Board of Trustees is, for a sufficient reason, unable to act as a member, the Minister shall determine whether the inability would result in the declaration of a vacancy.
(7) Where there is a vacancy
(a) under subsection (2), (3) or (4) or section 39 (2), or
(b) as a result of a declaration under subsection (6), or
(c) by reason of the death of a member, the Minister on the advice of the Board of Trustees shall notify the President of the vacancy and the President shall appoint a person to fill the vacancy.
(1) The Board of Trustees shall meet at least once every three months for the despatch of business at the times and in the places determined by the chairperson.
(2) The chairperson shall at the request in writing of not less than one-third of the membership of the Board of Trustees convene an extraordinary meeting of the board of trustees at the place and time determined by the chairperson.
(3) The quorum at a meeting of the Board of Trustees is seven members including the Director-General or any other person acting as Director-General.
(4) The chairperson shall preside at meetings of the Board of Trustees and in the absence of the chairperson, a member of the Board of Trustees elected by the members present from among their number shall preside.
(5) Matters before the Board of Trustees shall be decided by a majority of the members present and voting and in the event of an equality of votes, the person presiding shall have a casting vote.
(6) The Board of Trustees may co-opt a person to attend a Board of Trustees meeting but that co-opted person shall not vote on a matter for decision at the meeting.
(7) The proceedings of the Board of Trustees shall not be invalidated by reason of a vacancy among the members or a defect in the appointment or qualification of a member.
(8) Subject to this section, the Board of Trustees may determine the procedure for the Board of Trustee’s meetings.
(1) A member of the Board of Trustees who has an interest in a matter for consideration by the Board of Trustees shall disclose in writing the nature of that interest and is disqualified from participating in the deliberations of the Board of Trustees in respect of that matter.
(2) A member who contravenes subsection (1) ceases to be a member.
(1) The Board of Trustees may establish committees consisting of members of the Board of Trustees or non-members or both to perform a function.
(2) A committee of the Board of Trustees may be chaired by a member of the Board of Trustees.
(3) Section 39 applies to members of committees of the Board of Trustees.
Members of the Board of Trustees and members of a committee of the Board of Trustees shall be paid allowances approved by the Minister in consultation with the Minister responsible for Finance.
(1) The Board of Trustees may establish regional and district offices of the Trust in each regional capital and in the districts as the Board of Trustees may determine.
(2) A regional or district office of the Trust shall perform the functions of the Trust in the region or district that the Board of Trustees may direct.
(1) The President shall, in accordance with article 195 of the Constitution appoint a Director-General of the Trust.
(2) The Director-General shall hold office on the terms and conditions specified in the letter of appointment.
(1) The Director-General is responsible for the day-to-day administration of the affairs of the Trust and is answerable to the Board of Trustees in the performance of the functions under this Act.
(2) The Director-General shall perform any other functions determined by the Board of Trustees.
(3) The Director-General may delegate a function to an officer of the Trust but shall not be relieved from the ultimate responsibility for the performance of the delegated function.
(1) The President may appoint for the Trust such Deputy Director-General as may be necessary.
(2) A Deputy Director-General shall hold office on the terms and conditions specified in the letter of appointment.
(1) The President shall in accordance with article 195 of the Constitution, appoint for the Trust other staff necessary for the proper and effective performance of the functions of the Trust.
(2) The Trust may engage the services of advisers on the recommendations of the Board of Trustees.
(1) The Board of Trustees shall have a Secretary.
(2) The Secretary shall, subject to the directions of the Board of Trustees, arrange the business for the Board of Trustees and be responsible for the recording and keeping of minutes of proceedings of the meetings of the Board of Trustees.
(3) The Secretary shall perform any other functions that the Board of Trustees may direct or as the Director-General may delegate.
(1) The Trust shall have an internal auditor who shall be responsible to the Director-General.
(2) The Internal Auditor shall
(a) prepare a report on the internal audit work carried out at intervals of three months or such shorter period determined by the Board and submit the report to the Board of Trustees;
(b) make any observations in each report as appear necessary on the compliance, operational and conduct of the financial affairs of the Trust during the period to which the report relates;
(c) send a copy of each report prepared under this section to the Director-General; and
(d) perform other functions that the Director-General may prescribe.
(1) The Trust shall have an Actuary to manage the actuarial functions of the social security scheme.
(2) The Actuary shall be responsible to the Director-General.
(3) The Actuary shall
(a) assess the social security scheme in respect of the
(i) suitability of the financial system,
(ii) adequacy of contribution rate,
(iii) long-term financial solvency of the scheme, and
(b) perform other functions that the Director-General may assign.
(1) The Board of Trustees shall keep books of account and proper records in relation to them in the form approved by the Auditor-General.
(2) The Board of Trustees shall submit the accounts of the Trust to the Auditor-General for audit within three months after the end of the financial year.
(3) The Auditor-General shall, not later than three months after the receipt of the accounts, audit the accounts and forward a copy of the audit report to the Minister and the Board.
(4) The Internal Audit Agency Act, 2003 (Act 658) applies to this Act.
(5) The financial year of the Trust is the same as the financial year of the Government.
(1) The Board of Trustees shall within one month after the receipt of the audit report, submit an annual report to the Minister and the Authority covering the activities and the operations of the Trust for the year to which the report relates.
(2) The annual report shall include the report of the Auditor-General.
(3) The Minister shall, within one month after the receipt of the annual report, submit the report to Parliament with a statement that the Minister considers necessary.
(4) The Board of Trustees shall also submit to the Minister and the Authority any other reports which the Minister or the Authority may require in writing.
The Authority shall regulate the activities of the Trust to ensure compliance with the provisions of this Act.
(1) The Trust shall obtain actuarial valuations from an external actuary
(a) at intervals of not more than one year or, if obtained for the intervening years, at intervals of not more than three years, and
(b) in other circumstances and on other occasions that may be prescribed by the Authority.
(2) An actuarial valuation is a written report prepared and signed by the actuary
(a) valuing the scheme’s assets and calculating its liabilities,
(b) on developments affecting the scheme’s liabilities since the last actuarial valuation was prepared.
(3) The effective date of an actuarial valuation is the date by reference to which the assets are valued and the liabilities calculated.
(4) The effective date of an actuarial report is the date by reference to which the information in the report is stated.
(5) The intervals referred to in subsection (1) (a) are between effective dates of the valuation and shall not be more than one year
(a) after the establishment of the social security scheme, and
(b) after the effective date of the last actuarial valuation, or, if more recent, the last actuarial report.
(7) The Board of Trustees shall ensure that a valuation report is received by them within the prescribed period after its effective date.
(8) A provision in this section shall not affect any power or duty of the Board of Trustees or managers to obtain actuarial valuations or reports at more frequent intervals in other circumstances or on other occasions.
(9) An actuarial valuation or report shall be prepared in a manner to give information, contain statements and satisfy other requirements that may be prescribed by the Board of the Authority.
(10) The Board of Trustees shall ensure that any actuarial valuation or report obtained by them is made available to the Board of the Authority within thirty days after receipt.
The Trust is exempted from payment of corporate income tax and subject to article 174 of the Constitution, the Minister for Finance may, with the prior approval of Parliament, waive other taxes in relation to the Trust.
(1) The expenses related to the administration of the social security scheme except those expenses mentioned in subsections (2) and (3), shall be charged on the Fund in accordance with generally accepted accounting practice in relation to pensions, subject to a maximum limit set by the Board of Trustees in line with the general guidelines that may be issued by the Authority and consistent with best practices of similar social security schemes.
(2) The other expenses related to the provision of support services for other complementary schemes shall be charged to the complementary schemes based on an agreed formula.
(3) The administrative expenses involved in the transfer of the two and half per centum of the National Health Insurance Scheme shall be charged to the National Health Insurance Scheme on a formula to be agreed upon by the National Health Insurance Scheme and the Trust.
The Board of Trustees shall not charge any expenditure or make any deductions from the social security scheme funds other than those prescribed by the Authority or authorised under this Act.
(1) The Board of Trustees shall cause to be maintained for each member, an account to which shall be credited contributions of that member.
(2) The Trust shall send an annual statement of account to members of the social security scheme which shall be sent to their current address or the last known address of the member, except that where the member fails to provide an address, the Trust shall not be under any obligation to send a statement of account to that member.
(1) The social security scheme applies to
(a) every employer and to each worker employed by its establishment;
(b) any other employer, worker and self-employed to whom the Social Security Act, 1991 (P.N.D.C.L. 247) applied immediately before the commencement of this Act, and
(c) self-employed persons, who opt to join the social security scheme.
(2) Where a member has ceased to be employed, that member may continue to pay a monthly contribution at the rate of thirteen and half per centum of that member’s declared income or salary.
The minimum age at which a person may join the social security scheme is fifteen years and the maximum age is forty-five years.
(1) A worker who is entitled to retirement benefits under a pension scheme in existence before the commencement of this Act and is aged fifty-five years or above is exempt from the scheme.
(2) Despite the provisions of subsection (1) a person who is fifty-five years and above exempted under this Act may opt to join the new scheme.
(3) For members exempted under subsection (1), the employer and worker shall continue to contribute to the employee’s retirement benefit at the same level of contribution before the commencement of this Act until the worker retires.
(1) A worker to whom the social security scheme applies shall be given a Social Security Number on registration with the Trust.
(2) The social security number is not transferable and shall be used by the worker throughout the working life of that worker and for the purposes of this Act.
(3) An employer shall not transfer or use the Social Security number of one worker for another.
(1) The existence of a private or company pension provident fund, superannuation scheme or gratuity scheme in respect of workers to whom this Act applies does not exempt the employer or the workers from the application of this Act and an employer is responsible for deducting contributions from the remuneration of workers and paying them along with the employer’s own contributions to the Fund at the rates specified in this Act.
(2) Despite any other provision, an employer may
(a) amend written provisions of an existing scheme with the prior approval of the governing body of the existing scheme or with the consent of the Board of the Authority, or
(b) adjust the benefits that may be derived from the scheme to enable the payment of contributions to be effected under this Act.
(1) An employer shall remit thirteen and half per centum out of the total contributions of eighteen and a half per centum on behalf of the worker to the first tier mandatory social security scheme within fourteen days after the end of each month to the Trust.
(2) The minimum contribution is thirteen and half per centum of the approved monthly equivalent of the national daily minimum wage.
(3) Despite subsection (1) the maximum contribution shall not exceed thirteen and half per centum of a maximum amount that may be determined periodically by the Trust in consultation with the Board of the Authority.
(4) Out of the total contributions of thirteen and half per centum received on behalf of each member, two and half per centum shall be deducted and transferred to the National Health Insurance Fund.
(5) Where an employer deducts contribution from the salary of a worker, the contribution shall be held by the employer in trust until remitted to the Trust.
(6) Payment of contributions by an employer of an establishment to the Trust shall be accompanied with a contribution report in a form that may be prescribed by the Trust including electronic means.
(7) An employer shall submit the contribution report for that month at the end of that month, whether the contribution is remitted to the Trust or not.
(8) An employer shall remit the total contribution of eighteen and one half percent on behalf of a worker who does not qualify to join the social security scheme to the second tier mandatory occupational pension scheme within fourteen days after the beginning of each month.
(9) Subject to subsection (8) a percentage of the eighteen and one half percent to be determined by the Board of the Authority under the mandatory second tier occupational scheme shall be utilised to purchase an annuity for life from a life insurance company licensed by the National Insurance Commission with monthly or quarterly payments.
(10) Despite an agreement or understanding to the contrary, an employer is not entitled to
(a) deduct or recover the employee’s contribution from the worker’s salary, or
(b) the member’s contribution for an earlier contribution period from the salary in respect of a later period.
(11) For the purpose of subsection (10), the employer is entitled to make those deductions if the
(a) failure to make the deduction was due to a false declaration made in writing by the worker at the time of employment, or
(b) failure to deduct the contribution was the result of a mistake or a clerical error in which case the deductions shall be made according to the written instructions of a designated officer of the Trust.
(1) Subject to subsection (2) if a contribution is not paid within the specified period
(a) a sum equal to three per centum per month of the contribution payable shall be added to the contribution as a penalty;
(b) the Director-General shall serve a demand notice on the defaulting contributor and if payment of the contribution and penalty is not made within thirty days after the date of the service of the notice, the Director-General may proceed to collect and recover the contribution and the penalty; and
(c) if a person without reasonable excuse fails to pay the contribution and a penalty imposed under paragraph (a), the Director-General may direct the person to pay an additional penalty of a sum equal to three per centum of the total of the outstanding contribution and penalty imposed under that paragraph for each month during which the default continues.
(2) The Director-General may remit wholly or partly, the penalty imposed under subsection (1) with the approval of the Board of Trustees.
Where a worker is concurrently employed by more than one employer, each employer is responsible far only that employer’s obligation under this Act.
An employer shall not by reason of a liability for a contribution to the scheme or for any other charges under this Act or Regulations, reduce whether directly or indirectly, the salary or other emoluments of a member of the scheme.
(1) The Board of Trustees shall ensure that
(a) a statement of investment policy is prepared and maintained for the social security scheme, and
(b) the statement is reviewed and revised as necessary.
(2) In preparing or revising a statement of investment policy, the Board of Trustees shall comply with guidelines issued by the authority in consultation with the Board of Trustees.
(3) A statement of investment policy shall include the
(a) investment objectives;
(b) types of securities and other assets that may be acquired;
(c) the balance between the different types of securities and other assets;
(d) risk in implementing the investment policy; and
(e) return expected in implementing the investment policy.
The Trust may invest the pension fund assets in units of an investment approved by the Board of Trustees.
Subject to the existing Bank of Ghana foreign exchange rules, the Board of Trustees in consultation with the Minister for Finance may invest pension fund assets outside the country except that the amount to be invested externally shall not exceed a percentage of the total funds available for investment determined by the Authority.
(1) A member of the social security scheme who
(a) retires on attaining the compulsory retirement age of sixty years; or
(b) retires voluntarily on attaining the age of fifty-five years and has contributed to the social security fund for a period of not less than fifteen years in the aggregate or one hundred and eighty months in the aggregate is entitled to a superannuation pension.
(1) A member of the social security scheme who becomes an invalid is entitled to invalidity pension if
(a) the member has contributed to the Fund for not less than twelve months within the last thirty-six months before the occurrence of the invalidity; and
(b) a medical board certifies that the member is incapable of normal gainful employment because of the permanent physical or mental disability.
(2) Where a person to whom subsection (1) applies is subsequently certified by a medical board to have fully recovered and that person has not attained the compulsory retirement age, that person may rejoin the scheme.
(1) Where a member of the social security scheme has made less than fifteen years contribution to the Fund before the member retires either compulsorily or voluntarily, the member is entitled to
(a) a lump sum of money equal to the member’s contribution as benefit; and
(b) an interest of seventy-five percent at the prevailing Government treasury bill rate on the lump sum.
(1) Where a member of the scheme dies, a lump sum benefit is payable to the deceased’s family who
(a) are dependants of the deceased; and
(b) have been validly nominated as beneficiaries of the deceased.
(2) Where no nomination was made or the nomination made is found to be invalid by the Trust, the lump sum shall be distributed to the dependants in accordance with the Intestate Succession Act, 1985 (P. N. D. C. L. 111).
(3) Where a deceased member failed to nominate a surviving spouse and children as beneficiaries, the spouse and children may apply to the court for a variation of the nomination to include them.
The Minister on the advice of the Authority and in consultation with the Board of Trustees of the scheme may by legislative instrument prescribe other classes of benefits.
A member of the social security scheme who has attained the age of fifty-five years and has been a worker
(a) at an underground mine;
(b) at a steel works; or
(c) in any other employment determined as hazardous employment by the Authority for an aggregate period of not less than one hundred and eighty months is entitled on retirement to full retirement benefit.
(1) A person who has
- satisfied the minimum contribution period of not less than one hundred and eighty months,
(b) attained the age of sixty years or fifty-five years in the case of an underground mine worker or a worker specified in subsection (2) or has opted for voluntary retirement with reduced pension, and
(c) filed an application for superannuation benefit, is entitled to a pension payment for each month beginning with the first month in which the person becomes entitled to the payment.
(2) A person who has satisfied the minimum contribution period and has worked as an underground mine worker or in a quarry or in steel works or in any other employment and is likely to contract industrial diseases as defined in section 12 (2) of the Factories, Offices and Shops Act, 1971 (Act 328) by virtue of that employment is entitled to full pension benefit upon attaining the age of fifty-five years.
(1) A member may be paid full or reduced pension.
(2) The minimum pension payment shall be based on fifty per centum of the average annual salary for the three best years of a member’s working life.
(3) Where a member works beyond the minimum contribution period, the amount of pension payable shall be increased by one and half percent for every additional twelve months worked up to a maximum of eighty per centum .
(4) Where there are grounds to suspect that the salary has been inflated with intent to defraud, the Trust shall investigate and the right pension based on a formula determined by the Trust shall be paid to the member.
(1) Where a member dies having made at least twelve months contribution within the last thirty-six months prior to the death of the member, a lump sum payment computed on the present value of the members pension for a period of fifteen years, using the prevailing treasury bill rate or ten percent, whichever is the lower, shall be paid to the member’s nominated dependants.
(2) Where a member dies before making at least twelve months contribution within the last thirty-six months, a lump sum equal to total contributions and interest on the lump sum at the rate of seventy-five per centum of the Government treasury bill rate shall be paid to the nominated dependants of the member.
(3) Where a member retires but dies before the age of seventy-five years, a lump sum payment, based on the present value of the unexpired pension of the member not exceeding fifteen years shall be made to the nominated dependants of the member.
Where a member is certified by a medical board as being invalid, the member is entitled to a pension based on the minimum pension or the earned pension whichever is higher.
The Trust shall annually review the pension payment which shall be indexed to wage inflation rates of active members or another rate determined by the Trust in consultation with the Board of the Authority.
(1) A person who is required or entitled to become a member of the social security scheme shall furnish to the employer particulars concerning the member’s beneficiaries for the receipt of benefits on the death of that member.
(2) The employer shall enter the particulars in the prescribed form and obtain the signature or thumbprint impression of the person concerned and forward it to the Trust.
(3) An employer shall ask a potential employee to state in writing
(a) whether or not that person is a member of the scheme;
(b) the member’s account number;
(c) the name and particulars of the last establishment if any, where that person was employed; and
(d) whether anyone has been nominated to receive the benefits as survivor.
(4) Where that person was a member of the scheme, the old account number and the nominated beneficiaries shall continue to be operative, and the Trust’s attention shall be drawn to this by the new employer.
(5) Subject to subsection (3), a member of the scheme is free to update the nomination and shall review the nominations at least once every five years and forward the nomination to the Trust.
(6) Where payment of benefit has been made to a person validly nominated or varied by a Court order under this section, no other person shall have any other claim against the Trust.
(7) Despite subsection (6), where a member of the scheme has a child sixty percent of the survivors benefit shall be distributed to the child and forty percent to the persons nominated by the member.
The Government of Ghana may enter into a reciprocal agreement with the government of another country in which a scheme similar to the social security scheme has been established and there may be included in the agreement the following provisions
(a) that any period of membership of a scheme in the jurisdiction of that government may be treated as a period of membership of the social security scheme and the reverse; and
(b) that subject to agreed conditions, an amount standing to the credit of a member of the social security scheme in Ghana who works for an employer in the jurisdiction of this country may be transferred to the credit of the member in the scheme in another country and the reverse.
(1) A person who
(a) fails or refuses to register any establishment owned or set up by that person or to register any worker under this Act, or
(b) with intent to evade payment of a contribution or any other amount due knowingly makes a false statement or representation, or produces or furnishes or causes to be produced or furnished a document or information which that person knows to be false in a material particular;
(c) for personal benefit or for any other person, knowingly makes a false statement or representation or produces or furnishes, or causes to be produced or furnished, a document or information which that person knows to be false in a material particular;
(d) fails without reasonable excuse or refuses to submit its contribution payment with a contribution report or accompany contributions to the Trust within the prescribed period in the form and manner prescribed;
(e) wilfully obstructs or assaults an inspector, officer or servant of the Trust in the discharge of duties; or
(f ) without reasonable excuse, proof of which shall be on that person, fails to comply with a provision of this Act or Regulations made under this Act, is liable on summary conviction
(g) in respect of an offence under paragraph (a), (b) or (c) to a fine not exceeding the amount of contribution and penalty owed to the Trust or to imprisonment for a term not exceeding five years or both, or
(h) under paragraph (d), (e) or (f ) to a fine not exceeding two thousand five hundred penalty units or to imprisonment for a term not exceeding five years or to both.
(2) Where an employee of the Trust conspires or aids and abets another person in the commission of an offence specified in subsection (1), the employee is on summary conviction liable to the same punishment as provided under subsection (1).
(1) Criminal proceedings under this Act and Regulations made under it may be instituted and conducted by the Attorney-General or an officer of the Trust appointed by the Attorney-General by executive instrument.
(2) A Court when convicting a person of an offence under this Act or Regulations made under it may, in addition to the fine or imprisonment, order the person to pay to the Trust the amount of any contribution, together with any interest or penalty on the amount due from that person to the Trust at the date of conviction.
(3) The amount may be recovered together with the requisite contribution report in the same manner as a fine and shall be paid and credited to the Trust accounts of the members of the social security scheme concerned where applicable.
(4) The order of payment to the Trust shall be without prejudice to civil remedy.
(1) Where an offence under this Act is committed by a body of persons, in the case of a
(a) body corporate, other than a partnership, each director or officer of the body corporate is deemed to have committed the offence, and
(b) partnership, each partner of the firm is deemed to have committed the offence;
(2) A person shall not be convicted of an offence under subsection (1) if that person proves that the offence was committed without the knowledge of the person or that due diligence was exercised by the person to prevent the commission of the offence.
(1) Despite any other law, a contribution to the social security scheme along with interest or a monetary penalty payable or imposed for failure to pay in time may be recovered by action as a debt owed to the Trust at any time within twelve years after the date when the contribution or the penalty became due.
(2) An action for the recovery of contribution and other penalties under this section may be instituted and conducted by an authorised officer of the Trust.
(3) Despite any other law, the Circuit and District Courts have power to exercise jurisdiction in civil and criminal matters concerning social security contributions and offences created under this Act irrespective of the amount of claim.
(4) The Trust may attach the contribution of a borrower or guarantor under the Students Loans Act, 1992 (P.N.D.C.L. 276) for the purpose of the student loans repayment.
Where on an application—
(a) by the Trust, an attachment is issued against the property of an employer in execution of a decree against that employer and the property is seized, sold or otherwise realised in pursuance of the execution, or
(b) of a secured creditor, the property of an employer is sold, the proceeds of the sale or any other realisation of the property shall not be distributed to a person entitled to the distribution until the Court ordering the sale or other realisation has made provision for the payment of the amount due by the employer under this Act before the date of the order.
Except as provided in this Act,
(a) the accumulations to the credit of a member of the social security scheme, contribution in transit to the social security scheme or contributions with an employer, are incapable of being assigned or charged and are not liable to attachment under any law or order of a Court in respect of a debt or liability by the member, even in the event of the bankruptcy or insolvency of the member;
(b) an amount actually or potentially standing to a member’s credit on the social security scheme at the time of the member’s death and payable to the member’s dependants shall be free from attachment before it is paid to the dependants;
(c) accrued contributions to the social security scheme shall be paid despite the bankruptcy or insolvency of an employer; and
(d) the protection against attachment of contributions shall not apply to a borrower or guarantor under the Students’ Loans Scheme Law.
(1) Tax is not payable by an employer or employee in respect of contribution towards retirement or pension schemes under this Act.
(2) Tax is not payable on the benefits received under this Act.
(3) The social security scheme and any existing scheme under this Act is an approved scheme for ascertaining the chargeable income of a person for making the appropriate deductions under the income tax law, and income tax shall not be paid by an employer in respect of a worker on contributions which do not exceed thirteen and one half per centum of that person’s total salary.
A suit or other legal proceedings shall not lie against a member of the Board of Trustees, an officer or employee of the Trust in respect of anything done in good faith in pursuit of the objectives of this Act, except that personal liability suffered by a trustee officer or employee acting in good faith shall be indemnified by the Trust.
(1) An inspector of the Trust who has reasonable cause to believe that there are workers on premises may enter the premises at a reasonable time to make an examination and enquiry necessary to obtain information for the purposes of this Act.
(2) The inspector shall produce identification as an employee of the Trust when making an inspection to obtain information.
(3) In the discharge of duties under this section, an inspector may require the production of documents related to appointment, attendance, wages of workers and contributions or liability of employers to contribute to the scheme and take copies of or extracts from the documents.
(4) Where an establishment has discontinued its work or has been closed down and does not have premises, the inspector may require the production of the documents related to past transactions at a reasonable place and time, including the office of the inspector or the office of any other establishment and the previous employer, or any other person who has custody of the documents shall produce them as required by the inspector.
(5) Where it becomes necessary for an inspector to visit the premises declared by a competent authority to be a security area or the admission to which is restricted, the inspector shall not enter the premises or area without obtaining prior permission from the officer in charge of the premises.
(6) Where an establishment is liquidated or wound up or ceases to operate,
(a) records in relation to the names of the workers,
(b) the workers’ Social Security Numbers and salaries as defined in this Act, and
(c) deductions for Social Security contributions shall be deposited at the Registrar-General’s Department by the employer and the Trust shall be notified by the employer within seven days.
(7) In this section, an inspector includes a compliance officer or other officers appointed by the Trust to perform the function.
(1) The Trust has the option to record, file, maintain or transfer in electronic form, records of members required under this Act or Regulations made under this Act and may receive electronic transmitted information in respect of the scheme.
(2) A system of electronic recording, maintenance, filing or transfer of documents shall provide
(a) the criterion for authorising persons to file the documents in an electronic form, and
(b) ensure the security and authentication of the documents filed or transferred.
(1) The Minister, on the advice of the Authority and on the recommendation of the Board of Trustees
may, by legislative instrument, make Regulations for the purpose of carrying out the provisions and principles of this Part.
(2) Despite the Statutory Instruments Act, 1959 (No. 52) the penalty for the contravention of Regulations shall be a fine of not more than two thousand, five hundred penalty units.
(1) On the commencement of this Act, the following provisions shall apply
(a) each person to whom the Social Security Act, 1991 (P.N.D.C.L. 247) applied immediately before the commencement of this Act shall be credited for the number of months that person has already contributed to the social security scheme;
(b) where a member retires on reaching the age of fifty-five years on the coming into operation of this Act without satisfying the minimum contribution period, that person is entitled to a reduced pension, except where that person contributed for a period of not less than twenty years; or
(c) where a member fails to contribute for the minimum period of twenty years, that member shall be paid the amount standing to the members credit with interest calculated at the prevailing treasury bill rate.
(d) accrued or past service or past credits earned by every contributor to whom the new scheme applies in respect of the 25% lump sum benefit shall have the lump sum determined by a formula agreed between the Pension Reform Implementation Committee and the Trust based on actuarial assessment.
(2) The rights, assets and liabilities accrued in respect of the properties vested in the Trust established under the Social Security Act, 1991 (P.N.D.C.L. 247) immediately before the commencement of this Act and the persons employed by the Trust are transferred to the Social Security and National Insurance Trust established under this Act and accordingly proceedings taken by or against the former Trust may be continued by or against the Trust.
(3) A contract subsisting between the former Trust established under the Social Security Act, 1991 (P.N.D.C.L. 247) and another person and in effect immediately before the commencement of this Act shall subsist between the Trust established under this Act and that other person.
(4) The Board of Directors of the Trust existing immediately before the commencement of this Act shall continue in office until a new Board of Trustees is appointed.
Occupational Pension Schemes, Provident Fund and Personal Pension Schemes and Management of the Schemes
For the purposes of this Part “occupational pension scheme” means a pension scheme that is work-based, established under a trust which provides benefits based on a defined contribution formula in the form of a lump sum
(a) payable on termination of service, death or retirement, or in respect of persons covered under section 58 of this Act; and
(b) payable to or in respect of other persons specified under the second tier of the Scheme as provided for under section 1 of this Act.
(1) Subject to section 3 (1) and (2) an employer of an establishment shall, remit a mandatory contribution of five per centum to approved trustees of occupational pension schemes, out of the total contribution of eighteen and a half per centum made on behalf of the worker.
(2) The contribution shall be remitted by the employer within fourteen days from the end of each month.
(3) The minimum contribution shall be five per centum of the approved monthly equivalent of the national daily minimum wage.
(4) Where an employer deducts contributions from the salary of a worker, the contributions shall be held by the employer in trust until remitted to the trustees of the occupational pension scheme.
(1) The existence of a private or company pension provident fund, superannuation scheme or gratuity scheme in respect of workers to whom this Act applies shall not exempt the employer or the worker from the application of this Act and an employer is responsible for deducting contributions from the remuneration of workers and paying them along with the employer’s own contributions to the Fund at the rates laid down in this Act.
(2) Despite any other provision, an employer may
(a) amend written provisions of an existing scheme with the prior approval of the governing body of the existing scheme or with the consent of the Board of the Authority; or
(b) adjust the benefits that may be derived from the scheme to enable the payment of contributions to be effected under this Act.
(1) A contribution in respect of a member of a scheme vests in the member as accrued benefits as soon as it is paid to the approved trustees of the scheme.
(2) Income or profits derived from the investment of the accrued benefits of a member of a scheme by or on behalf of the approved trustee of the scheme shall, vest in the member as accrued benefits when received by that trustee after taking into account any loss arising from the investment.
For the purpose of preserving accrued benefits in a scheme
(a) a trustee of a scheme shall not pay or dispose of any part of accrued benefits to a scheme member or another person except in accordance with the provisions of this Act; and
(b) an employee or self-employed person shall not have a right or entitlement to accrued benefits except in accordance with this Act.
(1) A member of an employer sponsored scheme who ceases to be an employee shall, elect to have the member’s accrued benefits transferred to another scheme in accordance with the regulations of the scheme.
(2) Subsection (1) does not apply if a member exercises an entitlement to have the member’s accrued benefit paid to the member on retirement.
(3) The accrued benefits of a member of the scheme may be transferred
(a) to another registered scheme to which the member is eligible to belong, or
(b) to another account within the same scheme, if permitted or required by regulations of that scheme.
(4) Where the accrued benefits of a member of a scheme are to be transferred, the approved trustees of the respective schemes shall comply with requirements with respect to the transfer of the benefits.
(5) An employer shall comply with requirements or regulations with respect to the transfer of benefits if a member of a scheme whose accrued benefits are to be transferred under this section ceases to be an employee.
(6) The regulations required for the management of a scheme may include
(a) notices to be given, and
(b) procedure to be followed, in connection with the transfer of accrued benefits.
(1) Under the second tier, a member of the scheme who has attained retirement age is entitled to the entire accrued benefits in the scheme in a lump sum.
(2) A member who has not attained retirement age but has attained the age of fifty years and is not employed or self-employed is entitled to the entire accrued benefits in the scheme in a lump sum.
(3) A person who is not a citizen of Ghana who does not satisfy the qualifying conditions for a benefit of a scheme but desires to emigrate permanently from this country may be entitled to the entire accrued benefits in the scheme in a lump sum.
(4) A member of the scheme who
(a) is retired on the decision of a properly constituted medical board, based on the advice of a suitably qualified physician certifying that the employee is no longer mentally or physically capable of performing the functions of the office; or
(b) is retired due to total or permanent disability either of mind or body; or
(c) retires before the age of fifty years in accordance with the terms and conditions of employment; is entitled to the entire accrued benefits in the scheme in a lump sum.
(5) On the death of a member of the scheme, the approved trustee of the scheme shall pay the whole of the member’s accrued benefits as a lump sum
(a) to the member’s nominated beneficiaries, or
(b) if there are no nominated beneficiaries, to a person specified in the rules of the scheme.
(1) The accrued benefits of a member in an occupational pension scheme shall not be attached in execution of a judgment debt or be used as a charge, pledge, lien, or be transferred, assigned or alienated by or on behalf of the member.
(2) A disposition that is contrary to subsection (1) is void.
(1) A scheme shall have rules to prevent the assignment of benefit.
(2) Despite subsection (1) a scheme may allow a member to use that member’s benefit to secure a mortgage for the acquisition of a primary residence.
(1) An employer or employee shall not pay income tax in respect of contributions on a mandatory occupational pension scheme.
(2) Benefits received under the scheme are not taxable.
(3) Investment income including capital gains from the investment of scheme funds shall for the purposes of income tax be treated as deductible income.
(4) The occupational scheme is a scheme to ascertain the chargeable income of a person to make the appropriate deductions in respect of income tax.
(1) An employer shall maintain up-to-date records of direct payment arrangement.
(2) The record shall
(a) show the rates and due dates of contributions payable under the direct payment arrangement, and
(b) satisfy prescribed requirements.
(3) The employer shall, send a copy of that record to the trustees of the scheme within the prescribed period after the preparation of an up-to-date record.
(4) Where an employer indicates in the records that a contribution under the direct payment arrangement has not been paid on or before the due date, the trustees of the scheme shall give notice to the Board and the worker of that fact within fourteen days.
(5) The trustees of the scheme shall send a member a statement setting out the amounts and dates of the payment made under the direct payment arrangement before the end of the prescribed period.
(6) An employer who fails to comply with subsection (1), (2) or (3) commits an offence and is liable on summary conviction to a fine of two hundred and fifty penalty units.
For the purpose of this Act
(a) “provident fund scheme” means a scheme governed by a trust to which a contributor or the contributor’s employer or both contribute to a pension scheme which provides benefits based on a defined contribution formula
(i) to provide for the payment of lump sum benefits to the members of the scheme when they reach the retirement age, or any other prescribed event occurs in relation to them; or
(ii) in the case of members who die before reaching that age or before the occurrence of such an event, provides for the payment of those benefits to the personal representatives or beneficiaries of the estates of those members,
(b) “personal pension scheme” means any pension scheme to which the contributor contributes personally to provide benefits based on a defined contribution formula in the form of pensions or otherwise, payable on death or retirement to or in respect of persons covered under section 107 of this Act or their beneficiaries.
(1) A personal pension scheme applies to individuals
(a) who want to make voluntary contributions to enhance their pension benefits outside the mandatory schemes and any provident fund scheme, and
(b) in the informal sector who are not covered by any retirement or pension scheme under the mandatory part of the three-tier pension scheme.
(2) For persons under subsection (1) (b) a portion of their contributions may be accessed before retirement in accordance with the governing rules of the scheme.
(1) An employer may arrange for a worker to join and pay contributions to a provident fund or personal pension scheme where the worker
- is more than fifteen years of age,
(b) is more than the statutory retirement age, or
(c) is exempted under sections 31 and 60 of this Act.
(2) The employer is not obliged to pay contributions of a worker under subsection (1) to the scheme.
(3) Contributions made and returns earned from investment of the contribution shall, be credited to the account of the contributor subject to any deduction of fees.
(4) Where an employer contributes on behalf of a worker the contribution does not vest in the worker until at the end of the vesting period.
(5) Subject to subsection (4), an employer’s contributions to a provident fund on behalf of a worker is for that worker.
(6) Despite subsection (4) in the event of severance by the employer of the employment relationship with the worker, or in the event of liquidation of the employer, an employer’s contributions for its worker shall vest in the worker even if the vesting period has not expired.
(7) A worker may forfeit part or the total amount of the employer’s contributions if the worker leaves the employment of the employer before the end of the vesting period.
(8) On the death of a worker before or after the expiry of the vesting period, any accrued benefit of the worker shall devolve on the worker’s nominated beneficiary and in the absence of a nominated beneficiary in accordance with any applicable law.
(1) A self-employed person may join and pay contributions to a personal pension scheme if the person is more than the statutory retirement age or is exempted under this Act or is not more than fifteen years of age.
(2) Contributions by self-employed persons in the informal sector who are not covered under the mandatory scheme shall be credited to two separate individual sub-accounts
(a) the personal savings account, and
(b) the retirement account.
(3) The proportions to be credited to each account shall be prescribed in the governing rules of the scheme.
(4) A contributor may withdraw part of the contributor’s personal savings account in accordance with this Act and the governing rules of the scheme.
(5) The proceeds of the retirement account shall only be paid on the retirement of the contributor as monthly or quarterly pensions.
(6) The provisions of this Act on accrued benefits and the governing rules of the scheme which do not conflict with this Act shall apply to accrued benefits derived from voluntary contributions paid to a scheme under the provident fund and personal pension scheme.
(1) A member who has attained the retirement age is entitled to the entire accrued benefits in the scheme in a lump sum.
(2) A member who has not attained the retirement age may withdraw all or part of the member’s accrued benefits from a scheme
(a) after ten years from the date of first contribution in the case of the provident fund or personal pension scheme for contributors in the formal sector,
(b) after five years from the date of first contribution in the case of personal pension scheme for contributors in the informal sector, or
(c) following a certification by a medical board that the contributor is incapable of any normal gainful employment by virtue of a permanent physical or mental disability.
(3) The beneficiaries of the estate of a deceased contributor may withdraw the accrued benefits of the deceased from the scheme.
A contributor who is not covered under a mandatory pension scheme or any other pension scheme is entitled to
(a) use a percentage of accrued benefits, prescribed by the Board of the Authority to purchase an annuity for life payable monthly or quarterly from a life insurance company licensed by the National Insurance Commission, and
(b) a lump sum payment from the balance standing to the credit of the contributor’s accrued benefits or personal savings account.
(1) Subject to this Act, contributions made by an employer to a provident fund scheme on behalf of a contributor shall be treated as part of the deductible income for that employer for a tax year for the purpose of income tax.
(2) Contributions not exceeding sixteen and one half per centum of a contributor’s monthly income, made by either a contributor or the contributor’s employer or both shall, be treated as deductible income, for the purpose of income tax for the contributor and the contributor’s employer to the extent of their respective contributions.
(3) Persons in the informal sector who are not covered by the mandatory first tier basic national social security scheme and second tier occupational pension scheme, shall have thirty-five per centum of their declared income treated as deductible income for the contributor for the purposes of income tax.
(4) Investment income including capital gains from the investment of scheme funds shall for the purposes of income tax, be treated as deductible income.
(5) A withdrawal of all or part of a contributor’s accrued benefits under a provident fund or personal pension scheme
(a) on or after retirement shall be tax exempt;
(b) shall be subject to the appropriate income tax for contributors in the formal sector before ten years of contributions and before retirement;
(c) shall be subject to the appropriate income tax for contributors in the informal sector before five years of contributions and before retirement.
(6) A withdrawal from a scheme at any time after certification by a medical board that the contributor is incapable of normal gainful employment due to a permanent physical or mental disability is tax exempt.
(7) A withdrawal from a provident fund or personal pension scheme at any time by the beneficiaries of the estate of a deceased contributor is tax exempt.
(1) A contributor may pledge or create a charge in respect of a part or all of the contributor’s accrued benefits.
(2) A beneficiary who enforces a pledge or charge created by a contributor is liable for any tax applicable to withdrawals under a scheme.
(1) A scheme shall have rules that prevent the assignment of benefit.
(2) Despite subsection (1) a scheme may allow a member to use that member’s benefit to secure a mortgage for the acquisition of a primary residence but a member is not liable to pay tax on any withdrawal under this section.
Despite the provisions of any governing rules or an agreement, an employer shall
(a) provide the administrative and accounting services required to enable a worker to join and contribute to a personal pension scheme of the employee’s choice;
(b) make appropriate payroll deductions from the monthly salary of a worker who desires to contribute to a personal pension scheme and remit the contributions to the approved trustee of the scheme within fourteen days after the end of the month of deduction; and
(e) not mingle payroll deductions with the employer’s own funds and where an employer deducts contributions from the salary of a worker the contributions shall be held by the employer in trust until it is remitted to the appropriate approved trustee.
(1) An employer shall ensure that there is an up-to-date record of direct payment arrangement.
(2) The record shall
(a) show the rates and due dates of contributions payable under the direct payment arrangement, and
(b) satisfy prescribed requirements.
(3) The employer shall send a copy of that record to the trustees of a scheme, within the prescribed period after the preparation of an up-to-date record.
(4) The trustees of the scheme shall, give notice where any contribution shown by the record to be payable under the direct payment arrangement has not been paid on or before its due date except as provided.
(5) The notice shall be given by the trustees to the Board of the Authority and the employees within the prescribed period.
(6) The trustees of the scheme shall before the end of the prescribed intervals send the member a statement setting out the amounts and dates of the payments made under the direct payment arrangement during a prescribed period.
A life insurer who carries on personal pension and provident fund business shall
(a) maintain a separate and distinct fund known as the Pensions Fund representing the liabilities of that insurer in respect of pension and provident fund business;
(b) maintain a separate and distinct account related to the income and expenditure of that insurer in respect of its pension and provident fund business; and
(c) designate which of the assets of the insurer are to be regarded as assets of the Pensions Fund to be clearly shown in the balance sheet or other accounts of the insurer as assets of the Pensions Fund.
(1) In the event of a winding-up of an employer sponsored provident fund scheme,
(a) contributions made by the employer on behalf of a contributor before the vesting period shall not be available to a liquidator of the employer; and
(b) unpaid contributions of the employer and payroll deductions made from the contributor’s salary which have not been remitted to a trustee at the time of liquidation shall have priority over any other debt.
(2) Where a scheme is being liquidated
(a) the trustee shall not receive any contributions from the date of the commencement of the winding-up under a scheme managed by the trustee;
(b) any schemes operated by the trustee may be merged with a scheme operated by another trustee with the approval of the contributor and on the directions of the Board; and
(c) the merger shall be conducted to the other trustee by the transfer of the assets and liabilities of the scheme by the trustee to that trustee.
(3) Where the registration of a custodian is being withdrawn, the trustee of the scheme to which the Trust relates shall appoint another custodian approved by the Board with the approval of the contributor.
(1) A director is not an independent director if the director
(a) is a worker, partner or associate of a person who has applied to become a trustee of the applicant, or of an associate of the applicant; or
(b) is a director of an associate of the applicant; or
(c) holds shares of the applicant or of any associate of the applicant; or
(d) fails to satisfy the Board that the director has no past or present association financial or otherwise with
(i) the applicant other than as a director or professional adviser; or
(ii) a controller of the applicant; or
(iii) an associate of the applicant or of any other controller; that could affect the impartiality of the director’s independent judgement; or
(e) is a controller otherwise than by virtue of being a director, close relative, partner or employee of the applicant or of an associate of the applicant; or
(f) is an auditor or actuary of any occupational pension or provident fund scheme administered by the applicant.
(2) A trustee is not an independent trustee if the trustee
(a) is a controller, close relative, partner or employee of the participating employer or of an associate of that employer; or
(b) where the participating employer is a company, holds shares of the company or of an associate of that company; or
(c) fails to satisfy the Board that the person has the skill, knowledge, experience and qualifications that are, in the opinion of the Board, necessary for that person to administer occupational fund schemes; or
(d) fails to satisfy the Board that the applicant has no past or present association financial or otherwise with
(i) the participating employer; or
(ii) a controller of that employer; or
(iii) an associate of that employer or of any controller; that can affect the impartiality of the trustee’s independent judgement; and
(e) is an auditor or actuary of the scheme.
At the commencement of this Act, occupational pension schemes, provident fund schemes, personal pension schemes and other privately-managed pension schemes shall only be managed by trustees licensed approved by the Board.
A trustee licensed under this Act shall, in addition to other duties imposed by a trust deed, perform the following functions:
(a) secure scheme registration;
(b) appoint pension fund managers, custodians and other service providers and ensure their compliance with regulatory requirements or guidelines;
(c) maintain investment policy statements and internal control procedures that may be prescribed by the Board;
(d) ensure that the investment of funds of the scheme is diversified to minimise investment risk;
(e) act as a provident trustee in financing relationship with its members;
(f ) discharge the duties of a trustee;
(g) process transfer and payment requests as contained in the trust;
(h) keep proper accounting records and a members’ register;
(i) prepare and lodge annual audited financial statements, scheme and investment reports and other relevant records that the Board may require; and
(j ) perform other functions as may be directed by the Board.
(1) A person shall not be appointed as a trustee unless that person is licensed in accordance with this Act.
(2) A person seeking to be appointed as a trustee shall apply to the Board.
(3) The application shall
(a) be in a form prescribed by the Board,
(b) contain information and documents prepared in a manner prescribed by the Board, and
(c) be accompanied with the prescribed fee.
(4) A person who fails to obtain a licence and yet acts as a trustee commits an offence and is liable on summary conviction to a fine of two thousand penalty units or to a term of imprisonment not exceeding two years or to both.
(1) A person does not qualify to be appointed a trustee unless that person
(a) satisfies the minimum capital and net asset value requirement or a sum that may be prescribed by the Board;
(b) has the requisite qualified management staff in the appropriate profession; and
(c) has obtained a licence from the Board to manage pension schemes.
(2) A company is not eligible to apply for a licence unless
(a) it is a trust company with a registered company name including the word “trust” or “trustee”;
(b) its business is restricted to trust business; and
(c) at least one of the company’s directors is an independent director.
(3) The Board shall prescribe the qualifications of independent directors for the purposes of subsection 2 (c).
(4) An individual person is not eligible to make an application under this section if that individual is
(a) found by a court to be of unsound mind and incapable to manage the person’s personal affairs; or
(b) an undischarged bankrupt or has entered into a composition with creditors without paying the creditors in full.
(1) The Board shall consider an application for appointment as a trustee and take final decision within ninety days after the date of the submission of the application.
(2) The Board may, require an applicant by notice, to provide additional information and relevant documents that may be reasonably necessary to enable it determine the application.
(3) Where a requirement is not complied with within the time specified in the notice, the Board may reject the application.