What Is SSNIT Tier 3 Contribution? A Quick Guide!

What Is SSNIT Tier 3?

Going into retirement is not an easy thing. Many employees lose track of their lives after retirement. Some do prepare for it yet many others don’t but live daily in regret and sorrow after their retirement

How can one survive under this hot weather without money? How can one be sustained without planning and preparing for his future – without preparing for life after retirement.

You wouldn’t have the strength to work forever. One day, your body will give up on you, your bones will start arching and hurting, you wouldn’t be able to work as you need to, and the money you’ve invested and saved will be that which will keep you.

You have to prepare for your future. But how do you even do that as an employee? This is an article for you. This article will tell you more about SSNIT; its Tier 3 Contribution and other contributions with their benefits.

It will prepare you psychologically for retirement. Let’s delve into the details of this article to keep you informed on pension topics.

Table of Contents

Ghana’s 3-Tier Pension Scheme

Ghana’s Pension Act of 2008 did set out a three-tier pension scheme with three components of contributions.

The details of the three components are as follows:

  1. The Tier 1 Pension Scheme: This is an obligatory basic national social security scheme
  2. The Tier 2 Pension Scheme: This is an obligatory occupational pension scheme that is completely funded and managed privately
  3. The Tier 3 Pension Scheme: This a voluntary provident fund and a personal pension scheme fully funded and managed privately

The Tier 1 Pension Scheme

  1. This tier is an obligatory pension scheme that is controlled and managed by the Social Security and National Insurance Trust (SSNIT).
  2. The amount required as the contribution is 13.5% of the employee’s basic monthly salary. The employer of the employee pays 13% and the employee himself/herself pays 0.5%. The amount is not paid to the employee directly but to SSNIT who has been assigned by the constitution to control pension matters. (Note that the employee always gets a tax break on the percentage he/she personally contributes to SSNIT, that is; the 0.5 %.)
  3. Payment for any given month should be paid within 14 days after the end of that month. So in retrospect, the employers are required by law to pay SSNIT the previous month’s contributions on the 14th of each month.
  4. But the employer (the organization) and its employees must be registered with SSNIT in order for this to work. SSNIT will thereby assign to the organization an Employer Registration Number (ERN) after registration.
  5. On the other hand, the employees will receive a Social Security Numbers if they don’t have one already. In other words, if they have not registered with SSNIT before.
  6. In order to register with SSNIT, an employee will need to provide their basic information and a valid ID card. However, the employers will need to complete this checklist in order to be registered.

The Tier 2 Pension Scheme

  1. This tier is also obligatory like the first one but unlike the first tier, it is managed by Private Pension Service Providers (PSPs).
  2. The amount required as the contribution is 5% of the employee’s basic monthly salary. The cost related is borne by the employee.
  3. The employee will normally get tax relief for Tier 2 contributions. That is, contributions are deducted from the employee’s basic salary way before the salary is even taxed — effectively reducing the employee’s tax payment.
  4. The main difference here is that the contributions are not paid to SSNIT, but employers are allowed to choose their preferred Pension Service Provider. This opens the door for employees to get a chance to receive higher rates of return on their investment, most often above what SSNIT offers.

The Tier 3 Pension Scheme

  1. This is a voluntary provident fund and personal pension scheme. It is backed by tax benefits that provide additional funds for employees who have plans to make voluntary payments to supplement their pension benefits.
  2. Contributions that are within 16.5% of one’s basic monthly salary en route for Tier 3 receive a tax relief, that is, income is taxed after Tier 3 contributions. Nonetheless, any amount which is over 16.5% is still considered taxable income. And surely, this is one of the many advantages that the Tier 3 pension scheme has over the well-known traditional savings products such as fixed deposits and mutual funds.
  3. In similitude to Tier 2, the tier 3 pension scheme is also managed by Private Pension Service Providers (PSPs). But it is important to note that tax breaks are only available for contributions that are up to 16.5% of the employee’s basic monthly salary.
  4. Even though the employee can choose to contribute above his or her threshold, the excesses that come with it do not qualify him or her for any tax break. The employee only benefits or enjoys tax breaks by having the contribution amount subtracted from their basic salary just before it gets taxed.

Putting Everything Perspective

  1. The newly introduced pension scheme has 2 obligatory tiers (1 & 2) and one voluntary tier.
  2. Tier 1 has in it a contribution of 13.5% which is paid by the employer (13%) and the employee (0.5%).
  3. All investments made can be accessed as monthly pension contributions in the event of invalidity or retirement, or as a lump sum amount paid to survivors in the event of death of the contributor.
  4. It is required that the employer pays the total Tier 1 contribution to SSNIT before the 14th day of the following month or risk attracting hefty fines.
  5. The Tier 2 pension scheme features a contribution amount of 5% borne fully by the employee and paid by the employer to a Private Pension Service Provider. Through the contribution, the employee gets a tax break — taxing his/her basic salary after deducting the Tier 2 contribution.
  6. The Tier 3 pension scheme allows employees to voluntarily contribute to a personal pension scheme. Tax break (i.e. untaxed) is obtainable for contributions up to 16.5% — all excesses will not qualify for breaks.
  7. The employee pays their contribution to their preferred Pension Service Provider who is required by law to provide quarterly reports to contributors on the performance of their investment.
  8. Generally, Tier 2 investment cannot be retrieved before retirement. Also, the Tier 3 investment must remain in the scheme for at least 10 years (only include formal sector workers) or 5 years (only include informal sector workers) if the employee desires to obtain the associated tax benefits.

Note: it is important to however state that the Act allows funds in Tier 2 & 3 schemes to be used as down-payment for a mortgage on the employee’s primary home without paying any taxes — this makes Tiers 2 & 3 the best way to save towards homeownership. Below is a list of approved Pension Service Providers under the scheme:

  • NTHC Trustees Limited
  • Petra Trust Company Ltd.
  • Axis Pension Trust Limited
  • Enterprise Trustees Limited
  • Hedge Pensions Trust Limited
  • Secure Pensions Trust Limited
  • Glico Pensions Trustee Limited
  • General Trust Company Limited
  • United Pension Trustees Limited
  • Negotiated Benefits Trust Limited
  • Pensions Alliance Trust Company Ltd.
  • Provident Life Trust Company Limited
  • Metropolitan Pensions Trust Ghana Ltd.
  • Stallion Trust & Administration Limited
  • Universal Pensions Master Trust Limited

Note: Before settling with any of the service providers, .be sure to shop with them first. The aim is to pick the fund manager that has the strength to provide you with the highest return on your investment.

As soon as you’ve hired a fund manager, you will have to register your employees with the fund manager too. The process is not a tedious one, it generally involves the fund manager with a roster of employees and their salary and contribution details. Try and check with your fund manager though, as the process details may differ from provider to provider.

How Can I Pay My SSNIT Contributions?

You can get your SSNIT contributions paid at any GT-Bank branch nationally or electronic channels through the following steps:

Steps To Make Payment

1. Validate Your Payment

First, validate employee contribution for (Tier 1 & 2) at the SSNIT portal or at the SSNIT office.
A sixteen (16) digit payment advice number will be issued to the employer after the validation process has been completed.

2. In-Branch Payment Option

Thereafter, present your sixteen (16) digit payment advice number at any GTBank branch nationally to make payment.

3. Internet Banking Option

  • Log on to your GTBank Internet Banking platform
  • Go to Payments under the menu
  • Select SSNIT payments
  • Enter the 16 digit payment advice and verify
  • Enter the amount and submit

Frequently Asked Questions (FAQs)

What is this new Pension Scheme?

The new National Pension Scheme was instituted and introduced by the National Pensions Act, Act 766 to ensure that every citizen of Ghana (worker) receives retirement benefits as and when due.

The Act 766 which was passed on December 12th, 2008 instructed the formation of a new contributory Three-Tier Pension Scheme with the National Pensions Regulatory Authority (NPRA) to oversee the efficient administration of the composite pension scheme.

The New Pension Scheme was launched on 16th September 2009 and its implementation started in January 2010.

Why the New Pensions Act, 2008?

To offer pension benefits to employees to ensure retirement income security for workers.
To ensure that every worker receives retirement benefits as and when due.
To create a uniform set of rules and ethics for the administration, payment of retirement and associated benefits for workers.

What is The 3-Tier Scheme?

The First Tier is the Basic National Social Security Scheme for all workers in Ghana.  It is a well-defined benefit scheme and obligatory for workers to have 13.5% contributions made on their behalf.  The contribution is managed by SSNIT.

The Second Tier is a well-defined contributory Occupational Pension Scheme compulsory for workers with a 5% contribution made on behalf of members.  The contribution is managed by approved private Trustees.

The Third Tier contains all Provident Funds and all other Pension Funds separate from Tiers I and II. It is therefore a voluntary scheme.

What are the contribution rates and how are they distributed between the Employer and Employee?

Worker – 5.5% of workers’ basic salary, Employer – 13% workers’ basic salary, Total – 18.5% of workers’ basic salary.

Out of the 18.5%, the employer remits 13.5% to SSNIT within 14 days following the end of the month to the mandatory First-Tier Basic Social Security Scheme.

Again out of the 13.5% paid to SSNIT, 2.5% is sent to the NHIA for the member’s health insurance.

The residual 5% is sent to the mandatory Second Tier Occupational Scheme which will be privately managed by Trustees approved and licensed by the Board of NPRA.

Who can become a member?

The 3 –Tier scheme involves all workers in both the private and public sectors.  It is not mandatory for the self-employed.

Additional Groups Include:
Cap 30
Ghana Police
Prisons Service
National Fire Service
Teachers’ Pension Ordinance
Immigration Service Persons
Superannuation of Ghana Universities Staff

Who is exempted from Act 766?

Officers and men of the Ghana Armed Forces
Categories of persons exempted by the 1992 Constitution. e.g. Electoral Commissioner, CHRAJ Commissioner, Chief Justice, etc.

What are the features of the scheme?

It is a 3-tier scheme.
The first two are mandatory for all workers.
The Act is for both the public and private sector workers.

The Third-Tier is voluntary, fully funded by members and a privately managed provident fund and personal pension scheme.

SSNIT pays only the monthly pension of the beneficiary and the Fund Managers who manage the Second Tier with the 5% contribution rates will pay the lump sum.

The Minimum contribution rate – 18.5% of the approved monthly minimum wage (13.5% – SSNIT 1st Tier; 5% – 2nd Tier).

The Maximum Contribution – a maximum amount will be determined by SSNIT in consultation with the NPRA periodically. Currently, the maximum contribution is on a salary of GH¢25,000.00.

The minimum contribution period is 180 months in aggregate or 15 years.
The Entry Age/Maximum Age – New minimum age is 15 years and the maximum age for a new entrant is 45 years.

Age Exemption – individuals who are 55 years and above before the commencement of Act 766 are exempted from this new scheme. Conversely, a person who is 55 years and above exempted from the Act can still opt to join the scheme.

The new scheme includes almost all the various pension systems in the country.

What are the benefits under Act 766?

There are four (4) types of benefit under the SSNIT scheme that members can enjoy depending on which exigency has occurred.

Invalidity Pension
Emigration benefit
Survivor’s Lump sum.
Superannuation Pension/ Old age Pension

What are the qualifying conditions for the Superannuation Pension?

Under the Superannuation Pension, we have the Old Age Pension and Reduced Pension.

Old Age Pension
Full Pension

  • Must be at least 60 years
  • Must have made a minimum of 180 months (15 years) aggregate contributions.

Reduced Pension

  • Must be 55 years and above, but below 60
  • Must have made a minimum of 180 months (15 years) aggregate contributions.

Basis for Calculation

  • Age
  • Earned pension right (Contributions made)
  • Average of best 36 months’ salary (wages /earnings)

Note: Each year for the first 15 years of contribution is rated 2.5%.  The following years attract a yearly rate of 1.125%.  The Pension right ranges from 37.5% – 60%.

Pension Right Table

36 & above60.00

Where Does The Lump Sum Payment Fall?

The lump-sum payment now falls under the Second Tier.

What are the qualifying conditions for the Invalidity Pension?

In order to meet the requirements for invalidity pension, the member must have contributed for 12 months in aggregate within the last 36 months preceding the incidence of the invalidity. He/ She must have also been certified by a medical board as being incapable of any normal gainful employment owing to a permanent physical or mental disability.

The invalidity pension is paid monthly to persons who have been confirmed and certified incapable of earning an income.

Qualifying Conditions
For a person to qualify for invalidity pension, he or she:
Must have made a minimum of 1 year in aggregate for the last 36 months with the date of cancellation of appointment due to your invalidity as the reference point.

Must have been professed permanently invalid and incapable of any normal gainful employment:
By an eligible and renowned medical officer and
Certified by a Regional Medical Board on which an SSNIT Medical Officer is represented.

Medical Examination
Visit the nearest SSNIT branch in person or through your representative with a Medical Report from a renowned Medical Practitioner certifying that you are invalid.
Then, you will be expected to appear before a Medical Board for examination where your invalidity will be certified by the Medical Board.

What are the qualifying conditions for the Survivor’s Lumpsum Benefit?

Survivor’s Lump Sum
This is usually paid to dependents of members under the following conditions:
When a member dies before retirement or
When a pensioner dies before age 75

Computation of Benefit
When a member who has made at least twelve (12) months contribution within the last 36 months dies, a lump sum payment of the earned pension of the deceased member for a period of 15 years will be paid.

This is usually based on the present value discounted at the prevailing Treasury Bill rate or 10%. Whichever is lower, however, will be paid to the member’s nominated dependents.

When the death of the member did occur before he or she made the twelve (12) months contribution within the last 36 months, a lump sum which is equal to his total contributions and interest at the rate of 75% of government Treasury bill rate, will be paid.

What are the workers’ obligations?

The worker is required to have only one (1) social security number.
The worker has to note that the Social Security Number is not transferable.
The worker has to use the same social security number for his or her whole working life.
The worker can change his or her dependants regularly; at least once every five (5) years.
All workers who have an employer-employee relationship must be registered with the Scheme.
A member shall take steps to update or correct any missing or inaccurate information in the Statement of Account presented by SSNIT and support it with any relevant accurate document.

Who is an employer?

An employer is any individual who owns an establishment or any person who has definitive control over the affairs of an institution and with whom a worker has entered into a contract of service or apprenticeship and who is responsible for the payment of the worker’s salary.

What are the employer’s obligations under Act 766?

The employer:

Must ensure all employees are registered under the Scheme.
Must make regular contributions on behalf of the workers to SSNIT.
Must deduct 5.5% of the worker’s salary every month and add 13% of the worker’s basic salary to make 18.5%.
Is to remit 13.5% out of the 18.5% to the Trust within 14 days of the ensuing month.
Must pay 2.5% of the 13.5% to SSNIT. This shall be transferred by the Trust to the National Health Insurance Authority.
Shall accompany each contribution payment with a list of the workers showing their social security numbers and the amount each worker is contributing – called the Contribution Report.
Must submit the contribution reports by the end of the month whether contributions are remitted to the Trust or not.
Shall impose a penalty of 3% per month on unpaid contribution. An additional penalty of 3% per month on the contributions plus penalty may be imposed if after written demand notice the employer fails to pay.

Can the self-employed or any contributor fix any arbitrary salary for himself?

That cannot be done. The Act stipulates that minimum contributions must be made on the approved monthly minimum wage. The maximum contribution to the Trust shall not exceed 13.5% of a maximum amount to be determined by the Trust periodically in consultation with the NPRA.

What is Pension?

Pension is a fixed sum paid frequently to a person, normally following retirement from service. A regular payment is made during a person’s retirement from an investment fund to which that person or the employer has contributed.

It is a type of retirement plan, usually tax exempt, wherein an employer makes contributions toward a pool of funds set aside for employees’ future benefit. The pool of funds is then invested on the employees’ behalf, allowing an employee to receive benefits upon retirement or disability.

What is the National Pension Regulatory Authority?

The National Pensions Regulatory Authority was established by Act 766 to regulate and monitor the operations of the three-tier scheme to ensure effective Administration.

It has the capacity to sue and be sued and has perpetual succession.
It also issues guidelines for investment of Pension Funds and ensures compliance with Act 766.

It registers Occupational, Provident Funds and Personal Pension Schemes.
It set up standards, rules and guidelines for the management of Pension Funds.

What is a Trust?

A trust can simply be defined as an arrangement under which assets are held and looked after on behalf of others called beneficiaries. In other words, it is a legal arrangement separate from the plan sponsor where the contributions for the assets are deposited with the Trustee.

Who is a trustee?

A trustee is an individual who holds and looks after pension assets for the benefit of members and their dependents. Even though the assets are usually held in the name of the trustees, they do not belong to him or her.

What is a Life Certificate?

It is a certificate given by a trusted entity or pensioner to show that the pensioner is still alive. It is also called the Certificate of Life. At SSNIT, Life Certificates are filled and completed by pensioners aged 75 years and above and renewed every three (3) years to confirm the pensioner is still alive.

Under the Social Security Pension Scheme, What information can you update?

You can update the following information under the social security pension scheme:

Your name.
Your beneficiary nominations.
Your postal address, telephone number and email.
You can replace a misplaced membership card (Smart Card).
Your employer/SSNIT can update your financial statement after vetting by SSNIT



Nana Santuoh, manages digital web products and leads the editorial team at Kumasiano - a mouthpiece for African and black people while reminiscing their good old days back home.

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