Depending on where you find yourself, you may have heard from different people complaining about the sufficiency of social security benefits and how low pension payments are.
It is not uncommon to hear such agitations from the public but this could be partly due to the lack of understanding on factors that affect how much you are paid as pension.
Before we touch on the factors that affect how much pension you are paid, it is imperative to note that pension contributions are invested over a period of time to generate income for members at retirement.
These contributions however vary from one member to another due to salary differences.
For example in Ghana, the Social Security and National Insurance (SSNIT) pension scheme is salary or income-based and for that matter pension benefits depend on how much you earn or contribute. That means: “the higher your salary, the higher your pension benefits”.
Also as contributions are invested over time to generate the needed income for pensioners, it further implies that the longer your contributions stay invested, the higher your expected returns or pension benefits.
To this effect, the main factors affecting how much pension you would receive are:
- Age at which you retire
- Total contributions made before you retire
- Your three (3) best annual salaries