The Expatriate And Ghana Pension Law – Frequently Asked Questions

Q1. What is the national pension scheme in Ghana?
A: The National Pension Scheme is a 3-tier scheme created under the National Pensions Act 2008, Act 766. The tiers are:
● Tier 1 – the first tier is the Basic National Social Security Scheme for all workers in Ghana. It is a defined contribution scheme. The Social Security and National Insurance Trust (SSNIT) manages the Tier 1 scheme.
● Tier 2 – the second tier is an occupational pension scheme. It is also a defined contribution scheme. Approved Trustees manage this scheme.
● Tier 3 – the third tier includes all provident funds and all other Pension Funds outside Tiers 1 and 2. Tier 3 is a voluntary scheme.

Q2. Are expatriates obliged to contribute to SSNIT in Ghana?
A: Yes. All workers in Ghana, including expats, must contribute to SSNIT. Where the expat is exempt he does not have to contribute to SSNIT.

Q3. At what age can an individual contribute to/join the National Pension Scheme?
A: An individual can join the scheme if he is between 15 years and 45 years of age.

Q4. What is the percentage contribution of the employee and the employer?
A: The employee contributes 5.5% of his basic salary. The employer contributes 13% of the employee’s basic salary. The employer and employee contribute 18.5% in total of the employee’s basic salary. Basic Salary is a base pay, or an amount paid to an employee before any other allowances or benefits.

Q5. How are the employer and employee’s contributions apportioned to the Tier 1 and Tier 2 schemes?
A: The employer and employee contribute 18.5% in total of the employee’s basic salary. The contributions are shared to the two schemes as follows:
● Tier 1 – 13.5% of the total employee’s basic salary goes to Tier 1.
● Tier 2 – 5% of the total employee’s basic salary goes to Tier 2.

Q6. What are the conditions for exemption from contributing to the national pension scheme?
A: Exemption is available for expats on short-term contracts, not more than 36 months. He must also show proof that he is a member of a pension scheme in another country.

Q7. How does the expat apply for exemption from contributing pension in Ghana?
A: The expat must meet the conditions in the answer to Question 6. If he meets the conditions, he must apply in writing to SSNIT and NPRA. He must attach a copy of his employment contract and proof that he belongs to a pension scheme in his home country. The application for exemption from Tier 1 should go to SSNIT for consideration whilst that for Tier 2 should go to NPRA for consideration.

Q8. What happens if the expat’s employment is for more than 3 years? Can he remain exempt if he has proof of pension?
A: The expat does not have to contribute to Tier 1 but he will contribute to Tier 2 if he is employed for more than 36 months.

Q9. How long should a member contribute to the Tier 1 pension scheme to qualify for pension benefit?
A: Fifteen years or more.

Q10. How does an expat get his pension benefits?
A: An expatriate qualifies for his pension benefits when he:
● retires on reaching the compulsory retirement age of sixty (60) years; or
● take early retirement on reaching the age of fifty-five (55)
● resigns the employment or completes the contract and leaves the country.
The benefits from both Tier 1 and Tier 2 will be a lump sum dependent on his contributions and interest earned.

Q11. What happens if an expatriate worker who contributes towards pension dies?
A: His pension benefits, in the form of a lump sum, will be paid to his nominated beneficiaries. The lump sum from both the Tier 1 pension and Tier 2 depends on the amount of contributions and interest earned.

Written by Marian Botchway

Marian is an associate in the payroll unit of SCG Chartered Accountants.