Analysis of the performance of social security and national insurance trust in Ghana from 1995-2005

Abstract

The study reviewed and assessed the perfonnance of Social Security and National Insurance Trust's (SSNIT) pension scheme from 1995 to 2005, using horizontal and vertical analysis and financial ratios such as dependency, coverage, contribution, benefits and indebtedness to fund size and ascertained if there was government interference in the operations ofSSNIT. Evaluative research design was adopted in the study. Documentary secondary data which include written materials such as notices, correspondence, minutes of meetings, reports to stakeholders, diaries, transcript of speeches, books, journals, magazine articles and administrative and public records were used. The perfonnance of the SSNIT pension scheme from 1995-2005 has been mixed. This is because while funding status, contributions received and benefits paid have improved over the years, other indicators like investment income, coverage rate, dependency ratio and processing time have not fared as well. Agency problems exist in the operations of SSNIT. This is due to the fact that there political interferences that negatively affect the choice of investment and investment income. The study showed that the method of computing the pensionable income is an indication of poor scheme design because it can easily expose the scheme to abuse. The study recommends that SSNIT should review the use of the best three years average to ensure a more equitable system. The average of total years of contribution should be used. SSNIT should approach the government to review the legal and regulatory framework to resolve the politically based agency problem eminent in the running of the scheme.