Pensions, Politics, and Parliament: Rethinking MPs’ retirement security

For Members of Parliament (MPs) in Ghana, the call to public service is both an honour and a burden. They champion policies, shape national discourse, and dedicate years to governance—yet, when their tenure ends, many face an unsettling reality. Without a structured pension system, former MPs often find themselves financially adrift, struggling to sustain a dignified retirement after years of public service.

This growing concern ignited fresh debate in Parliament, with the Majority Leader and Leader of Government Business, Mahama Ayariga, leading the charge for a groundbreaking pension scheme.
He made a compelling case, emphasizing that securing the financial well-being of retired legislators is not just a matter of welfare—it is essential for preserving the integrity and independence of Ghana’s democracy.

The Majority Leader pointed out that some Ghanaian MPs serve for over two decades, yet retire without any formal pension arrangement, leaving them vulnerable to financial hardship.

Former Minister of Works and Housing, Kojo Oppong Nkrumah, backed the idea of a pension scheme but suggested determining MPs’ pensions at the beginning of their term rather than at the end. He argued this would allow MPs to plan for their financial futures more effectively.

Proposing the use of carbon credit revenues

To avoid placing an undue burden on taxpayers, the Majority Leader introduced an innovative funding mechanism—financing the pension scheme through revenues from carbon credits rather than direct government allocations.

“We are proposing to design an MPs’ pension scheme funded from revenues from carbon credit. If we establish the right infrastructure for a carbon credit market and ensure policies maximize Ghana’s gains from trading in carbon credits, some of those revenues can go into the pension fund for MPs.”

Even though, climate advocates have opposed Parliament’s proposal to fund a pension scheme for MPs using revenues from carbon credit trading, calling it a reckless diversion of critical climate funds, there’s still a need to support the MPs plan for their retirement.

This article, thus, proposes a guide to the implementation of a pension policy for Ghana’s Members of Parliament.

Eligibility

• An MP must serve at least one full parliamentary term (four years) to qualify for pension benefits.
• MPs with multiple terms shall have their benefits adjusted in proportion to their cumulative service.
• MPs dismissed due to gross misconduct or corruption may forfeit part or all of their pension benefits, subject to a parliamentary and legal review.
  Contribution Structure
• MPs shall contribute 15% of their basic salary towards the pension scheme.
• The Government of Ghana shall match this with an additional 25% of the MP’s basic salary.
• Contributions shall be regulated by the National Pensions Regulatory Authority (NPRA) through an independent parliamentary pension fund.

Proposed Pension Benefits

• MPs completing one full term shall be entitled to a lump sum payment equivalent to 50% of their total contributions.
• MPs serving two or more terms shall receive a monthly pension equivalent to 60% of their final salary, subject to actuarial adjustments.
• The pensionable age shall be 60 years, with an early access option at 55 years at a reduced benefit rate.
• In case of death, the MP’s designated dependents shall receive a lump sum equivalent to five years of the pension amount.
• MPs may opt for voluntary contributions to increase their retirement benefits.
• Portability: if MPs leave office early, their accumulated pension benefits can be transferred to another retirement savings scheme. Similarly, MPs can port their pension contributions to the scheme when they join parliament.

Proposed additional benefits

• Retired MPs will be eligible for healthcare support under a dedicated retirees’ medical scheme.
• MPs may access pension loans under favourable terms from the fund to support post-retirement economic activities.
• Financial literacy and retirement planning workshops shall be conducted regularly to help MPs manage their post-service finances effectively.

Proposed Pension Fund Governance

• A Parliamentary Pensions Board shall oversee fund management, ensuring compliance with regulatory guidelines.
• The board shall include representatives from Parliament, NPRA, the Ministry of Finance, and independent pension experts.
• The fund shall undergo annual audits, with findings published to ensure transparency and accountability.

Proposed Special Provisions

• MPs who serve less than one term may withdraw their personal contributions but shall not receive government contributions.
• The pension scheme shall allow voluntary additional contributions, enabling MPs to enhance their retirement benefits.
• MPs engaged in dual government employment (e.g., as ministers) shall have their benefits harmonized to prevent pension duplication.

International Best Practices Adopted

• Kenya Model: Structured contributions and tiered benefits based on service years.
• UK Model: Independent pension oversight to prevent political interference.
• Canada Model: Transparent reporting and strict contribution requirements.
• South Africa Model: Fiscal sustainability measures to prevent excessive state liabilities.

Conclusion

This pension policy is designed to secure the financial well-being of MPs post-service while safeguarding Ghana’s economic interests. By ensuring transparency, sustainability, and global alignment, it reinforces the principle that public service should be both an honourable duty and a financially secure career path. This framework, it is submitted, will guarantee that MPs can exit public office with dignity.

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The writer, Richard Kwadwo Nyarko, is a journalist and a researcher in pensions. Email: oguaafisherman@gmail.com