The African Centre for Retirement Research (ACRR) has called for a shift from Ghana’s fixed-rate pension adjustment system to a variable indexation model designed to reduce income inequality and curb old-age poverty among retirees.
The proposal, unveiled at a stakeholder dialogue in Accra, aims to ensure that pension increases are more responsive to inflation and better targeted toward low-income retirees who are most vulnerable to economic shocks.
Dr. Frank Odoom, Advisory Board Chairperson of ACRR, said the current fixed-rate pension adjustment framework has failed to protect low-earning pensioners from rising living costs.
“The variable indexation model would allow those with smaller pensions to receive higher annual increments, offering a more equitable and sustainable approach to retirement income,” he explained.
The stakeholder meeting, jointly organised by ACRR and the Friedrich Ebert Stiftung (FES), gathered policymakers, pension experts, SSNIT officials, and representatives of pensioners’ associations to discuss alternative models for improving retirement security.
Dr. Odoom noted that while Ghana’s three-tier pension system has expanded coverage, it has not fully addressed the widening gap between high and low-income retirees.
“Our research-driven model provides a redistribution mechanism that enhances income equality without undermining the financial sustainability of the Social Security and National Insurance Trust (SSNIT),” he said.
The research, which surveyed more than 1,700 pensioners across Ghana, revealed worrying levels of pension inadequacy. Many retirees, particularly those in the lower income bracket, struggle to meet basic needs due to stagnant benefits amid inflation.
“With this variable model, we seek to correct the systemic imbalances on the pension payroll. Doing so will not only improve pension adequacy but also align Ghana’s social protection policies with the United Nations Sustainable Development Goals,” Dr. Odoom added.
Abdallah Mashud, ACRR’s Research Team Lead, said the data shows that about 60 percent of Ghanaian pensioners currently live below the poverty line, a clear indicator that reform is overdue.
“Seven out of ten retirees believe their pensions are inadequate, and four out of five strongly support reforming the current indexation policy,” he said.
He emphasized that adjusting pensions based on inflation and wage dynamics, rather than fixed rates, would reduce income disparities and promote the long-term solvency of the pension fund.
“This is not just about fairness but it’s about building a resilient system that sustains itself and supports those who need it most,” he added.
Martin Guttler, FES Country Representative, drew parallels between Ghana and other economies, noting that pension inequality is a global concern.
“Even in Germany, we face similar challenges. What matters is applying the principle of social solidarity to redistribute benefits in a way that uplifts those at the bottom,” he said.
He expressed optimism that Ghana’s reform efforts could set a precedent for inclusive pension policy design in Africa. “This dialogue should mark the beginning of a coordinated process to find a balanced, alternative indexation mechanism that promotes income security and dignity in old age,” Guttler added.
The ACRR’s proposal is expected to feed into ongoing discussions on reforming SSNIT’s indexation framework. If adopted, the model could reshape Ghana’s pension landscape, making it more adaptive to inflationary pressures and economically fairer for retirees with limited lifetime earnings.
