Perceived Benefits and Effectiveness of Tier 2 of the 3 Tier Pension Scheme Among Public Sector Staff in Central Region

Abstract

The paper focused on exploring the management of tier 2 of the 3 tier pension scheme in Ghana. The papers focuses on the public sector staff assessment of the extent to which the tier 2 could smoothen their consumption on retirement and the effectiveness of the management of the tier 2. The paper was motivated by the fact that while the tier 1 is a common knowledge to most workers, the tier 2 data are not too obvious. Therefore, it is critical to assess how this could affect workers’ perception about the management of the tier 2. The paper employs data from metropolitan, municipal and district assemblies (MMDAs) in Central Region of Ghana. Pure qualitative research approach was employed within the framework of exploratory design.The paper revealed that the participants perceive that the tier 2 could not contribute significantly to smoothen their future consumption on retirement. It was also found that participants doubt the effectiveness of the tier 2 of the pension scheme due to inadequate information and weaknesses in transparency. The paper concluded that the effectiveness of the Tier 2 pension management is not satisfactory. The paper further revealed that many of the people in the public sector cannot ascertain the true benefit of the Tier 2 scheme on their future pension. It is therefore recommended for government to organise workshops or seminars to educate their employees in the public sector on their pension schemes, identify the prospects and challenges associated with the scheme early enough to assist workers to make informed decisions about their retirement.

Keywords: Three Tier Pension Scheme; Mandatory Tier 2, Smoothen Consumption and Pension Benefits

DOI: 10.7176/EJBM/12-26-06

Publication date:September 30^th 2020