A recent Report by the International Labour Organisation (ILO) has sounded the alarm on the precarious financial state of the Social Security and National Insurance Trust (SSNIT), projecting that its reserves could be depleted by 2036. The report, based on actuarial valuation, indicates that SSNIT's reserves are on track to reach zero within the next decade and a half.

SSNIT, which transitioned from a Provident Fund to a Social Insurance Pension Scheme in 1991, has been a vital source of financial security for retirees in Ghana. However, the report highlights concerning trends, including the steady increase in administrative expenses relative to member contributions. This raises questions about the efficient allocation of funds intended for beneficiaries.

One notable finding from the report is the disparity between SSNIT's investment returns and other investment options available in Ghana, such as the 91-Day Treasury Bills (T-Bills). While T-Bills have consistently provided higher returns, SSNIT's average return on assets remains comparatively low, averaging at 70 per cent of the T-bill yield.

The actuarial projections outlined in the report underscore the urgent need for action to ensure the sustainability of SSNIT for future generations. The report suggests that an increase in contribution rates is necessary to bolster the scheme's finances. However, it also acknowledges challenges, including low government contribution compliance and demographic shifts that will strain the system further.

Key highlights from the actuarial valuation include projections that annual contributions will be insufficient to cover all expenditures by 2029, leading to a decline in reserves and eventual depletion by 2036. This necessitates timely intervention to prevent SSNIT from running out of funds.

The ILO recommends that the government increase its contributions to the scheme promptly and advises SSNIT to set specific financing and funding objectives to guide the extent of the required contribution rate adjustment.

As Ghana grapples with the looming threat of SSNIT's financial depletion, decisive action is needed to safeguard the welfare of retirees and ensure the long-term viability of the country's social security system.