Is 2026 SSNIT Pension Indexation socially fair and economically sustainable?

By Isaac FRIMPONG (PhD)

The Social Security and National Insurance Trust (SSNIT), which manages Ghana’s basic national pension scheme under Tier 1, has approved a 10 per cent pension indexation for 2026.

The adjustment raises monthly pension incomes across the board and lifts the minimum pension for retirees from just over GH¢300 to above GH¢400. The decision has been welcomed by some pensioners and labour advocates as a needed intervention for low-income retirees, while others argue it falls short in the face of the rising cost of living.

The debate has once again raised a familiar question: can pension indexation under Ghana’s largest defined benefit scheme deliver social fairness without undermining long-term financial sustainability?

This article argues that both SSNIT and pensioners’ groups have legitimate positions, but the recurring tension points to deeper structural weaknesses in Ghana’s pension system, particularly low lifetime earnings and limited pension education, which annual increases alone cannot fix.

SSNIT’s Rationale

Under the 2026 indexation framework, all pensioners will receive a uniform six per cent increase, complemented by a flat redistribution amount of GH¢91.56 drawn from the remaining portion of the adjustment pool.

This design produces higher effective percentage increases for pensioners at the lower end of the income scale, while keeping increases for higher earners closer to the overall headline rate.

SSNIT frames this outcome as an application of the solidarity principle that underpins social security systems, where risk and resources are shared to support vulnerable beneficiaries alongside contribution-based entitlements.

SSNIT says the decision was taken in consultation with the National Pensions Regulatory Authority (NPRA) and in line with the National Pensions Act, 2008 (Act 766). The Trust points to a combination of macroeconomic and scheme-specific factors, including salary growth among active contributors, projected average inflation of about eight per cent, plus or minus two percentage points, by the end of 2025, and the need to safeguard the fund’s long-term financial health.

From a scheme management perspective, the logic is clear. As a defined benefit scheme, SSNIT bears investment risk, longevity risk, and the obligation to pay promised benefits regardless of economic conditions. Pension increases today translate into higher long-term liabilities that must be financed over decades. Caution is therefore not an option but a core requirement of prudent fund management.

From an economic standpoint, SSNIT’s cautious approach reflects real constraints. With about 2.1 million active contributors expected to rely on the scheme in the future, maintaining financial sustainability remains central to its mandate. Excessive indexation would shift costs to future contributors and risk undermining confidence in the system as a whole.

Pensioners’ Concerns

While SSNIT’s justification is technically sound, pensioners’ groups also have valid reasons for dissatisfaction. Organisations such as the Concerned SSNIT Pensioners Forum argue that the 10 per cent adjustment, though welcome, does not adequately reflect the cost pressures faced by retirees.

Many pensioners report difficulty meeting basic expenses such as rent, food, transportation, and healthcare. These are costs that often rise faster than headline inflation and weigh more heavily on older households. From this perspective, percentage increases applied to very low pensions do not necessarily translate into meaningful improvements in living standards.

The forum has therefore called for a higher minimum monthly pension of GH¢600 and average pension increases of between 15 and 20 percent. These demands are grounded in a social protection argument: that pensions should guarantee a basic standard of living in old age, not solely a reflection of past earnings adjusted by cautious indexation formulas.

When Both Sides Are Right, the System Deserves Scrutiny

The tension between SSNIT and pensioners is often framed as a conflict between generosity and prudence. In reality, both sides are acting rationally within the limits they face. Pensioners are reacting to declining purchasing power and financial insecurity, while SSNIT is constrained by its responsibility to preserve the scheme’s long-term viability for current and future pensioners.

The persistence of this conflict suggests that the problem lies elsewhere. Indexation has become the focal point of debate because it is the most visible adjustment lever at retirement. By the time it is applied, however, most of the factors that determine pension adequacy are already fixed.

Structural Roots

Pension outcomes under Tier 1 are largely shaped by earnings histories over a working life. Low salaries, intermittent formal employment, and limited contribution periods translate directly into low pensions at retirement. No indexation formula, however redistributive, can fully offset decades of weak earnings.

Without stronger salary growth, broader coverage, and better-informed contributors, the gap between pension expectations and outcomes will persist. Improving pension outcomes therefore requires attention to salary policy, particularly in the private sector where a large share of contributors are employed, as well as better integration of informal sector workers who currently lack pension coverage.

Equally important is pension education. As discussed in an earlier analysis, The Gap No One Talks About: Ghana’s Retirement Problem, many workers approach retirement without a clear understanding of how their pensions are calculated, what income to expect, or how additional contributions could improve outcomes. This lack of early guidance and planning leaves retirees overly dependent on Tier 1 pensions and fuels disappointment when indexation adjustments fall short of expectations.

These structural weaknesses explain why indexation debates recur each year with similar intensity. They are symptoms of a system that intervenes too late and relies too heavily on post-retirement adjustments to solve problems rooted in working life.

Conclusion

Ghana’s three-tier pension system is often regarded as comprehensive by regional standards, offering workers multiple avenues to save for retirement. Some employers even supplement mandatory contributions by voluntarily contributing at higher rates under the Tier 3 scheme. Yet design strength alone does not guarantee adequate retirement incomes.

The 2026 SSNIT pension indexation reflects a careful attempt to balance social protection with financial sustainability. Pensioners are justified in demanding higher and more secure incomes, just as SSNIT is justified in managing risk and long-term obligations cautiously. The recurring tension between these positions points to structural challenges that indexation alone cannot resolve.

Addressing retirement insecurity in Ghana will depend on earlier and broader interventions: stronger and more consistent salary growth, improved pension education throughout working life, expanded coverage, and clearer expectations about what contributory pensions can and cannot deliver.

Until these foundations are strengthened, indexation debates will remain necessary, but insufficient, as a response to Ghana’s retirement problem. The next article in this series will examine how pension education and life-cycle planning shape retirement outcomes long before indexation decisions are mad

The author is the Host, The Mingop Initiative Podcast (YouTube)
Adjunct Lecturer, Researcher and Consultant.
[email protected]

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