Ferdinand | EducationGhana | April 13| Top 5 Simple Steps to Calculate SSNIT Worker Death Survivors’ Lump Sum in 2023
The Social Security and National Insurance Trust (SSNIT) is a statutory public Trust charged under the National Pensions Act, 2008 Act 766 with the administration of Ghana’s Basic National Social Security Scheme.
Its mandate is to cater for the First Tier of the Three-Tier Pension Scheme. The Trust is currently the largest non-bank financial institution in Ghana.
The primary responsibility of the Trust is to replace part of the lost income of workers in Ghana due to Old Age, Invalidity or Death of a member where dependants receive lump sum payment.
It is also responsible for the payment of Emigration benefits to a non-Ghanaian member who is leaving Ghana permanently.
The Pension Scheme as administered by SSNIT has an active membership of over 1.6 million as of January 2021 with over 226,000 pensioners who regularly receive their monthly pensions from SSNIT.
Worker Death Survivors’ Lump sum
The Survivors’ benefit is a lump sum amount equivalent to the total contributions plus the
interest on the contributions computed at the prevailing Government Treasury bill rate.
Applicable Interest Rates
Under PNDCL 247
The interest is computed using one-half of the prevailing 91-Day Government Treasury bill
rates.
Under Act 766
The interest is computed using three-quarters of the prevailing 91-Day Government Treasury bill rates.
Procedure for Computing Worker Death Survivors’ Lump Sum
The methodology for the computation of the Survivors’ Lump sum is as follows:
(i) Accumulate each contribution payment using the applicable interest rate up to the
the month of last contribution payment prior to death.
(ii) Sum up the Accumulated amount for each contribution payment to obtain the
Survivors’ Benefit (i.e. the Lump Sum).
Survivors’ Lump sum = Sum of Accumulated value of Contribution Payments
How is the Survivors’ Benefit distributed to Beneficiaries?
For each nominated beneficiary/dependant the computed benefit (i.e. Survivors’ Benefit) shall be distributed as follows:
(a) Where no nomination was made or the nomination made is found to be invalid by the Trust, the lump sum (Survivors’ Benefit) shall be distributed to the dependants in accordance with the applicable laws (e.g. Intestate Succession Act, 1985 (PNDCL 111), Children’s Act. 1998,(Act 560)).
(b) Where a deceased member failed to nominate a surviving spouse and/or children as
beneficiaries, the spouse and children may apply to the court for a variation of the
nomination to include them.
Benefit due Beneficiary = Percentage Awarded Beneficiary X Survivors’ Benefit
Example 1
A member who has contributed to the scheme for a period of 250 months dies aged 56 years 2 months with the following three best annual salaries of GH₵60,000, GH₵58,000 and GH₵44,000.
Calculate the Survivors’ Benefit:
(i) Under PNDCL 247
(ii) Under Act 766
NB: It is assumed that the member has already contributed for at least 12 months within the last 36 months prior to death.
STEP 1: Determine the Pension Right
The member died aged 56 years 2 months and whilst working (i.e. before retirement) and therefore constitute a Worker Death Survivors’ Benefit.
Under PNDCL 247
A total number of months of contributions of 250 (under PNDCL 247) would give a pension right value equal to:
PENSION RIGHT = 0.50 + (Total number of months of contributions – 240) X 0.00125
PENSION RIGHT = 0.50 + [250 – 240] x 0.00125 = 0.5125 or 51.25%
Under Act 766
A total number of months of contributions of 250 (under Act 766) would give a pension right value equal to:
PENSION RIGHT = 0.375 + [Total number of months of contributions – 180] x 0.0009375
PENSION RIGHT = 0.375 + [250 – 180] x 0.0009375= 0.440625 or 44.0625%
STEP 2: Determine the three best years’ annual salaries
The three best years’ annual salaries prior to the death given are:
The average of the three best years’ annual salaries is computed as:
Average of three best years’ annual salaries = Salary 1+ Salary 2 + Salary 3/3
Average of three best years’ annual salaries = 60,000 + 58,000 + 44,000 /3 = 54,000
STEP 3: Compute the Annual Pension
Annual Pension = Average of three best years’ annual salaries X Pension Right
Under PNDCL 247
Annual Pension = 54,000X 0.5125 = GH₵27,675.00
Under Act 766
Annual Pension = 54,000X 0.440625 = GH₵23,793.75
STEP 4: Determine the Monthly Pension
Divide the Annual Pension by 12 to obtain the Monthly Pension
Monthly Pension = Annual Pension /12
PNDCL 247: The Monthly Pension is GH₵27,675.00/12 = GH₵2,306.25
ACT 766: The Monthly Pension is GH₵23,793.75/12 = GH₵1,982.81
STEP 5: Compute the Survivors’ Benefit
The Survivors’ Benefit is computed as follows:
Survivors’ Benefit = Annuity Factor X Monthly Pension
Under PNDCL 247
The annuity factor value for a period of 144 months at a discount rate of 10% is 83.67653
Thus, the present value of the member’s monthly pension of GH₵2,306.25 for a period of twelve years(or 144 months), at a discount rate of 10% is calculated as follows:
Survivors’ Benefit = 83.67653 X GH₵2,306.25 = GH₵192,979.00
Under Act 766
The annuity factor value for a period of 180 months at a discount rate of 10% is 93.05744
Thus, the present value of the member’s monthly pension of GH₵1,982.81for a period of twelve years(or 180 months), at a discount rate of 10% is calculated as follows:
Survivors’ Benefit = 93.05744 X GH₵1,982.81 = GH₵184,515.22
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Example 2
A pensioner with a date of birth 25th December 1953 retired on 25TH December 2013 and died on 27th March 2015 after receiving his monthly pension amount of GH₵1,000. Calculate the
Survivors’ Benefit:
(i) Under PNDCL 247
(ii) Under Act 766
This is a Pensioner Death Survivors’ Benefit
STEP 1: Determine the age at death of the pensioner
The age of the pensioner in complete years and months at the time of death is 62 years 3 months.
STEP 2: Determine the Monthly Pension
The Monthly Pension being paid to the Pensioner at the time of death has been given as:
Monthly Pension = GH₵1,000
STEP 3: Calculate the period of Unexpired Pension Payments
Under PNDCL 247
The number of months of Unexpired Pension Payments at the time of death of the Pensioner is given as:
Number of Months of Unexpired Pension = Number of Monthly Pension Payments remaining up to the exact Age of 72
Number of Months of Unexpired Pension = [(Age 72 – Age 63) X 12] +9 months in Age 62
Number of Months of Unexpired Pension = [9X12] + 9 =117
Under Act 766
The number of months of Unexpired Pension Payments at the time of death of the Pensioner is given as:
Number of Months of Unexpired Pension
= Number of Monthly Pension Payments remaining up to the exact Age of 75
Number of Months of Unexpired Pension = [(Age 75 – Age 63) X 12] +9 months in Age 62
Number of Months of Unexpired Pension = [12 X 12] + 9 =153
STEP 4: Compute the Survivors’ Benefit
Compute the present value of the member’s pension for the unexpired period (in months), using a 10% discount rate
Survivors’ Benefit = Annuity Factor X Monthly Pension (at time of death)
You can also apply for the Survivors Benefit HERE
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