Arrears of social security contributions from Government of Ghana employees not fully settled by the Controller and Accountant General’s Department to the Social Security and National Insurance Trust (SNIT) amounts to GH¢4,334,387,226.39, the 2021 Auditor-General’s report has revealed.
Section 91 of the Public Financial Management Act, 2016 (Act 921) requires the Board of Directors of a public corporation governed by this Act to ensure the efficient management of the financial resources of the public corporation including the collection and receipt of moneys due to that public corporation.
However, the A-G said: “We noted during our review of contribution management that, Controller and Accountant General Department (CAGD) as of 31 December 2020, owed the Trust GH¢1,124,568,970.17 in respect of contribution receivable from Government of Ghana (GOG) employees. Also, per Section 64(1) of the National Pensions Act, 2008 (Act 766) and based on our previous recommendation, the Trust has imposed a penalty of 3% on delay payments by CAGD over the years to the tune of GH¢3,209,818,256.22 bringing the total indebtedness of CAGD to GH¢4,334,387,226.39”.
The report noted that CAGD did not make timely payment of employees’ contributions to SSNIT.
It said the delay erodes the time value of money, reduces the Trust’s ability to pay pension and thereby posed threats to retirement income security of workers.
“We recommended that Management should liaise with CAGD and Ministry of Finance on the payment plan to defray the outstanding debt”, the report said.
The management of SSNIT, in a response, said the Trust “already has a payment plan with the Ministry of Finance to ensure that the outstanding debt is paid.”
The said the government has so far made some efforts to settle the indebtedness.
“In 2020, two (2) Bonds totaling GH¢1.00 billion were received as part payment of the indebtedness”.
Also, SSNIT said: “It is worthwhile to indicate that a demand notice which captured total indebtedness as of June 2021, was sent to the Controller & Accountant General on August 05, 2021, all in an effort to update the CAGD of their current indebtedness including that for the period ending December 2020”.
Financial Performance
SSNIT recorded a surplus of GH¢1.1billion in 2020 financial year as compared with a deficit of GH¢472 million registered in 2019. This represents a 314.4% increase in the Trust’s financial performance over the period.
Net Contributions Received increased by a GH¢1.6 billion or 66.5% from GH¢2.4 billion in 2019 to GH¢4.1 billion in 2020.
The rise is as a result of the settlement of Government of Ghana employees’ contributions in arrears paid by the Controller and Accountant General Department with bonds which was recognised on cash basis.
Also, Net Investment Income increased by 19.9% or GH¢77.7 million following the rise in dividend received, returns on corporate loans and term paper deposit by 25.3%, 14.6% and 241.7%, respectively, among others.
Penalty on delayed contributions and profit on disposal of fixed assets mainly accounted for the rise in other income, the report said.
Direct cost also increased by GH¢369 million, from GH¢3.1 billion in 2019 to GH¢3.5 billion in 2020 representing a 11.7% rise. The report attributes the rise mainly to “an increase in benefit payment by 12.1%, emanating from an increase in the number of pensioners from 215,850 in 2019 to 227,407 in 2020”.
SSNIT’s administrative expenses also increased by 14.2% while Non-Current Assets increased by GH¢1 billion from GH¢9.3 billion in 2019 to GH¢10.4 billion in 2020, representing a 10.9% rise.
The increase in Non-Current Assets was mainly attributed to the increase in Investment Properties following a GH¢24.9 million additions to Real Estate under construction and a 92.1% increase in Non-Current Financial Asset Specifically Securities in Ghana Government Bonds.
Current Assets increased by 72.1% from GH¢604million in 2019 to GH¢1.04 billion in 2020.
This was mainly as a result of increase in the Trust’s cash and bank balances by 887.7% and Current Financial Asset, particularly Fixed Deposits maturing within and after 91 days by 130.3%.
CLICK HERE TO DOWNLOAD PRESS RADIO MOBILE APP
The Trust’s liquidity ratio (Current ratio) has improved from 0.68:1 to 1.82:1 which indicates that the Trust can honour its short-term obligations as and when they fall due.
Source: classfmonline.com
