A new study by the Africa Center for Retirement Research (ACRR) has revealed growing income disparities among Ghanaian retirees, warning that the current pension indexation policy is deepening economic inequality and threatening the long-term sustainability of the national pension system.
The ACRR’s analysis shows that Ghana’s pension adjustment method, which awards the same fixed rate of increment to all pensioners regardless of income level, disproportionately benefits high-income retirees while offering little financial protection to low earners.
According to the report, this practice is worsening poverty among older Ghanaians and undermining the social security scheme’s fiscal balance.
“Under the current indexation policy, economic disparities between pensioners continue to widen,” said Abdallah Mashud, head of the ACRR research team.
“It fails to protect the poor and puts pressure on the financial sustainability of the pension system. Reform is urgently needed to ensure equity and adequacy.”
The study, which surveyed 1,700 pensioners across all 16 regions, revealed that three in every five Ghanaian pensioners live below the poverty line, struggling to survive on less than $2 a day.
More than 70% of respondents said their current benefits are insufficient to meet daily expenses, while 78% believe the pension indexation policy does not reflect real cost-of-living increases.
The ACRR notes that although the minimum pension value has increased periodically since 2000 and even doubled in some years, such as 2013 and 2014, the overall impact on poverty reduction remains limited.
The current minimum pension, pegged at GH¢300 per month, is considered “grossly inadequate” given inflationary pressures and rising living costs.
The existing indexation method lacks an inflation-adjustment mechanism and fails to account for the financial vulnerabilities of low-income retirees.
“Awarding a uniform fixed rate to both privileged and poor pensioners ignores income disparities and exposes the Social Security and National Insurance Trust (SSNIT) to inflationary risks,” Mr. Mashud warned.
The report highlighted that this approach has led to financial stress within the SSNIT scheme, as benefit adjustments are not aligned with revenue growth or actuarial projections.
ACRR’s findings further cited the last three actuarial valuation reports (2014, 2017, and 2020), which all raised concerns about the scheme’s medium- to long-term solvency if reforms are not implemented.
Speaking at the Friedrich Ebert Stiftung (FES), ACRR stakeholder engagement on “Alternative Pension Indexation Models” held in Accra, experts, trade union representatives, and policymakers agreed that Ghana’s pension policy requires a comprehensive overhaul.
Participants recommended a differentiated indexation system that ties benefit adjustments to inflation trends and wage growth, a model already adopted by several OECD countries.
This would ensure that lower-income pensioners receive higher proportional increases to close the inequality gap while maintaining the fund’s financial health.
Mr. Mashud emphasized that such a reform would not only reduce old-age poverty but also strengthen social protection and restore confidence in Ghana’s pension administration.
“Ghana must transition toward a more progressive and fiscally responsible indexation policy that balances adequacy and sustainability,” he noted.
The findings come at a time when the government faces increasing pressure to enhance social protection amid rising living costs and an aging population.
Analysts warn that without reform, the existing system could widen inequality and strain public finances as pension obligations rise.
Experts are urging the Ministry of Employment and Labour Relations, SSNIT, and the National Pensions Regulatory Authority (NPRA) to implement the recommendations of past actuarial reports and establish a clear framework that aligns pension adjustments with macroeconomic indicators such as inflation, GDP growth, and wage trends.
“The goal is not just to increase pensions but to ensure fairness and sustainability,” Mr. Mashud said. “Pension indexation must protect the poorest, not widen the gap between the rich and the poor.”
