All You Need To Know About SSNIT 3 Tier Scheme

The Pensions Act of 2008 established a three-tier pension scheme consisting of three levels of contributions:

  1. TIER 1: A mandatory basic national social security scheme
  2. TIER 2: A mandatory occupational pension scheme that is fully funded and privately managed
  3. TIER 3: A voluntary provident fund and personal pension scheme — also fully funded and privately managed

The First Tier

This tier is a mandatory scheme that is managed by the Social Security and National Insurance Trust (SSNIT).

The contribution amount due is 13.5% of the employee’s basic monthly salary. The employer pays 13% and the employee pays 0.5%.

This amount is paid to SSNIT. Note that the employee gets a tax relief on the percentage he/she personally contributed — i.e. the 0.5%.

The contributions for any given month are due no later than 14 days after the end of that month.

So, effectively employers will pay their previous month’s contributions to SSNIT on the 14th of every month.

Both the employer (the organisation) and their employees must be registered with SSNIT for this to work though.

SSNIT will assign the organisation an Employer Registration Number (ERN) once registered.

The employees on the other hand will receive Social Security Numbers if they don’t already have one — i.e. they haven’t previously registered with SSNIT.

To register with SSNIT, an employee will need to provide their basic information and a valid ID card.

Employers on the other hand need to complete this checklist in order to be registered.

The Second Tier

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.

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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.

The Third Tier

Just like Tier 1 and 2, we have Tier 3 which one can contribute and claim before or on retirement.

However with tier 3, you can go in for your money at any time (i.e within one year or more) but with condition. The purpose of Tier 3 is to instill saving habit among Ghanaian public/civil servants.

Therefore one has 16.5% (maximum) tax free of gross salary contribution to make. Meaning, if your current tax is GHS 321.5 and you ought for Tier 3 (7.5%), your tier 3 amount must be deducted first before tax is slapped on the remaining money, hence your new tax must be far less than GHS321.5 (around GHS200+).

This is a voluntary provident fund and personal pension scheme.

It is supported by tax benefits to provide additional funds for workers who want to make voluntary contributions to enhance their pension benefits.

Any contribution up to 16.5% of one’s basic monthly salary towards Tier 3 receives a tax break, i.e. income is taxed after Tier 3 contributions.

However, any amount over 16.5% is still considered taxable income. This is one of the many advantages that Tier 3 schemes have over traditional savings products like fixed deposits or mutual funds.

Like Tier 2, this tier is also managed by Private Pension Service Providers (PSPs).

Note that tax reliefs are only available for contributions up to 16.5% of the employee’s basic monthly salary. While the employee can choose to contribute above this threshold, the excess does not qualify for any tax reliefs.

The employee enjoys tax reliefs by having the contribution amount deducted from their basic salary before it gets taxed.

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  1. Tier 3 is tax free therefore if you want to claim your money before 10 years time, government will tax it accordingly.
  2. However, if it is up to ten years or more, then you can go in for your money (total amount contributed without been taxed)
  3. Again, if one is less than 10 years to go on retirement before started tier 3, it will not be taxed when retired.
  4. When contributing and unfortunate happen, the money will not be taxed before given to next if kin


  1. It can be left till retirement to supplement your tier 2 (lamp sum)
  2. It can be used as mortgage
  3. Also to acquire loan in financial institutions etc.

NB: 1. If you are contributing TIER 3 and your tax remain same or not reduced, then surely you are been lured or deceived

  1. Tier 3 is managed by Unions under supervision of NPA
  2. Each union appoints it own independent fund manager ( Eg. Glico, Pension Alliance Trust, etc) to manage the fund and supported by board of trustees from the union (Union members)
  3. The amount to contribute ranges from 0.1% to 16.5%

Putting it all together

  • The new pension scheme has 2 mandatory tiers (1 & 2) and a voluntary third tier.
  • Tier 1 features a contribution of 13.5% which is contributed by the employer (13%) and the employee(0.5%).
  • The investment can be accessed as monthly pension payments in the event of invalidity or retirement, or as a lump sum amount paid to survivors in the event of death of the contributor.
  • The employer must pay the total Tier 1 contribution to SSNIT latest by the 14th day of the following month or risk attracting hefty fines.
  • 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.
  • Tier 3 allows a voluntary contribution by the employee into a personal pension scheme. Tax relief (i.e. untaxed) is available for contributions up to 16.5% — any excess will not qualify for reliefs.
  • Contribution is paid by the employee to their preferred Pension Service Provider who is mandated by law to provide quarterly reports to contributors on the performance of their investment.
  • 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 utilized 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.

Here is a list of approved Pension Service Providers under the scheme:

  1. Petra Trust Company Ltd.
  2. Metropolitan Pensions Trust Ghana Ltd.
  3. Pensions Alliance Trust Company Ltd.
  4. Provident Life Trust Company Limited
  5. Universal Pensions Master Trust Limited
  6. Secure Pensions Trust Limited
  7. Enterprise Trustees Limited
  8. United Pension Trustees Limited
  9. Axis Pension Trust Limited
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  • General Trust Company Limited
  • Glico Pensions Trustee Limited
  • Negotiated Benefits Trust Limited
  • Stallion Trust & Administration Limited
  • NTHC Trustees Limited
  • Hedge Pensions Trust Limited

Be sure to shop around with various service providers before settling with one. The idea is to pick the fund manager that can provide the highest return on your investment cedis.

Once you’ve hired a fund manager, you will have to register your employees with the fund manager too.

This process generally involves the fund manager with a roster of employees and their salary and contribution information.

Do check with your fund manager though, as this process may vary from provider to provider.


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