If you are self-employed, or employed and think SSNIT alone will not be enough, the answer is a Tier 3 personal pension. It is the one part of the Ghanaian system you can set up on your own initiative, in an afternoon.
SSNIT versus a private pension
They are not competitors. They do different jobs and most people should have both.
| SSNIT (Tier 1) | Private pension (Tier 3) | |
|---|---|---|
| What it pays | A monthly income for life | A pot of money you own |
| Who bears the risk | The scheme | You |
| If you die early | Survivors’ benefit, by formula | The balance is yours to leave |
| If you live to 95 | Still paying | It can run out |
| Choice of provider | None | Entirely yours |
| Compulsory | Yes, if employed | No |
The important asymmetry: SSNIT is insurance against living a long time, which is the risk you cannot self-fund. A private pot is a pot. Neither replaces the other, which is why “should I do SSNIT or a private pension” is usually the wrong question.
How to start one
- Choose a licensed trustee. They must be licensed by the National Pensions Regulatory Authority (NPRA), which publishes the register. Banks, insurers and standalone pension firms all run schemes. Check the register before you hand over money — an unlicensed “pension” is not a pension and gets no tax relief.
- Ask three questions before signing: what the total charges are as a percentage a year, what the fund returned over the past five years net of those charges, and what the minimum contribution is.
- Open the scheme and start the clock. The 5-year informal or 10-year formal wait for a tax-free withdrawal runs from your first contribution, so open it early even at a token amount.
- Set up a standing order or MoMo debit. The schemes that work are the ones nobody has to remember.
- Get your TIN onto the account, or the tax relief has nothing to attach to.
— Opening a bank account — Mobile money
If you are self-employed or informal
This is the majority case in Accra — around 66% of workers in a typical district, and as high as 85% in some.
Two things are available and both are underused:
- Voluntary SSNIT contributions. You can contribute to Tier 1 with no employer, which keeps the 15-year clock running toward a pension for life. For anyone who was formally employed for a few years and then left, this is often the highest-value thing available — those earlier years only turn into a pension if you reach the minimum.
- Informal-sector personal pension schemes, designed for irregular income: daily or weekly contributions, no fixed amount, MoMo collection. They are the formal version of a susu, with tax relief and regulation attached.
The fifteen-year rule is the thing to plan around
Any pension at all requires 180 months. People who worked formally for six or eight years, left, and never contributed again get a refund of their own money instead of an income for life. Continuing voluntarily is usually far cheaper than the gap it closes.
— Freelancing in Ghana — Registering a business
What to watch for
Charges compound against you. A one-percentage-point difference in annual charges is enormous over thirty years, and Ghanaian scheme charges are not uniform. Ask for the figure in writing.
Inflation is the real opponent. A fund returning less than Ghanaian inflation is losing you money politely. Compare the fund’s return to the inflation rate for the same years, not to zero.
Cedi or dollar. Some schemes offer a foreign-currency option. Given the cedi’s history that is worth asking about, though it usually comes with higher charges and restrictions.
Anything promising a guaranteed high return is not a pension. Ghana has a long history of collapsed investment schemes marketed to savers. If it is not on the NPRA register, it is not this.
The tax is most of the case
Contributions up to 16.5% of basic salary come off before PAYE, so the government funds part of your saving at your marginal rate.
— The tax relief, worked through — Pension calculator — SSNIT and pensions