Pensions Alliance Trust Company Limited, managers of the Second Tier Pension Contributions by Staff of the Ghana Education Service has begun creating the awareness of its deduction of workers’ monthly Contributions.
PAT manages pension tier 2 of all staff of Ghana Education Service ( Teaching, non Teaching and all officers). In view of this, text messages were sent to all GES staff on 17/03/2018 updating members of their monthly contribution.
The Second Tier Contribution, popularly referred to as Tier 2 Contribution came into being as part of the new pensions act, in which Ghanaian workers including teachers Registered late last year.
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What is The 3-Tier Scheme
The First Tier is the Basic National Social Security Scheme for all workers in Ghana. It is a defined benefit scheme and mandatory for workers to have 13.5% contributions made on their behalf. The contribution is managed by SSNIT.
The Second Tier is a defined contributory Occupational Pension Scheme mandatory for workers with 5% contribution made on behalf of members.The contribution is managed privately by approved Trustees.
The Third Tier which includes all Provident Funds and all other Pension Funds outside Tiers I and II and is a voluntary scheme.
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%, 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.
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Overview of the Tier 2 Pension Scheme
The second tier is also mandatory but unlike the first tier, it is managed by Private Pension Service Providers (PSPs). The contribution amount due is 5% of the employee’s basic monthly salary. This cost is borne by the employee.
The employee gets a tax relief for Tier 2 contributions, i.e. the contribution gets deducted from the employee’s basic salary before the salary gets taxed — effectively reducing the amount of tax the employee pays.
The main distinction here is that the contribution is not paid to SSNIT, but rather, the employer is allowed to select their preferred Pension Service Provider. This gives employees a chance to earn higher rates of return on their investment, usually above what SSNIT offers.
Important Notice :
Tier 2 features a contribution of 5% borne wholly by the employee and paid by the employer to a Private Pension Service Provider. The employee gets a tax relief for this contribution — his/her basic salary is taxed after deducting the Tier 2 contribution.
In general, Tier 2 investment cannot be accessed before retirement. The Tier 3 investment on the other hand must remain in the scheme for at least 10 years (for formal sector workers) or 5 years (for informal sector workers) if the employee wants to keep the associated tax benefits.
Important: The Act however allows funds in Tier 2 & 3 schemes to be utilised as down-payment for a mortgage on the employee’s primary home without paying any taxes — making Tiers 2 & 3 the best way to save towards home ownership.
How to Access Monthly and Total Contribution of Pension Tier 2 on your Phone
How Do I Sign Up to Check Contribution
1. Download PAT mobile Appfrom Google play store
2. Install the and open the App
3. Enter PAT ID ( It is part of message sent you, which begins: PAT/GES/*****/*****)
4. Enter your SSNIT number
5. Click on login
6. Enter Username ( any name you can remember which you will use to access your information)
7. Enter password and confirmed it
8. Click next to land you into your PAT account
You Can also Acces Your Information through This means :
1. Visit PAT Login Portal
2. Click on Sign up for new account
3. Enter your SSNIT number
4. Enter sign ID
5. Enter your email address
6. Click on Sign up
Source:EducationGhana.net