The Voluntary Tier 3 Pension For Ghanaians Explained

      The Voluntary Tier 3 Pension For Ghanaians Explained

      1. Workers are, however, required to voluntarily sign up/apply for their own tier 3 pension to be able to benefit from it.

      2. Pension deductions from worker’s salary take care of tier 1 and tier 2 pensions because the tier 1 and tier 2 pensions are compulsory.

      See also: The Three (3) Tier Pension System Simplified

      3. Signing up for tier 3 pension means extra deductions of funds from your salary to your tier 3 pension account or managers.

      4. For several reasons, workers in the same profession are required to use the same private manager for their tier 3 pension.

      Therefore, speak to your workplace union executives to enquire about how to sign up and start saving.

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      5. The main benefit workers get for signing up for the tier 3 pension is that, any deduction to tier 3 will not be taxed, which is, 17.5% tax that is not deducted from the contribution amount, since the savings/deductions will be made with the amount classified in the 17.5% tax rate bracket. For example, saving Ghc200 to tier 3 pension means the person has saved Ghc35 of tax. Otherwise, without saving the Ghc200 to tier 3, the Ghc200 will be taxed 17.5% (Ghc35) and Ghc165 given to the worker as net salary. It is therefore a choice to save Ghc200 or receive Ghc165 now (savable amount minus tax)

      See also: Diaso Senior High School Headmaster Beaten To Pulp On Campus.

      6. Everyone has the opportunity to save upto a maximum of 16.5% of their basic salary to prevent capable workers from saving all their disposable income to tier 3 without paying taxes that the government needs.

      7. Also, any worker who wishes to withdraw his or her tier 3 pension either partially or completely before ten (10) years will be taxed 15% on the amount to withdraw. However, withdrawal after ten (10) will not attract any tax. The objectives are

      a. to dissuade people from using tier 3 to avoid paying tax on their salary and

      b. also to encourage a long-term savings culture.

      See also: Teachers Are Now Endangered. Apor Era Over. Africa Education Watch Partners WAEC To Set Traps For Leakage Accomplices And Exam-Hall Helpers

      8. Tier 3 contributors can be withdrawn anytime, either partially or completely.

      9. The financial prudence-based reasons for signing up for tier 3 are:

      a. the worker indirectly enjoys a 17.5% tax gift from the government

      b. With the aid of compound interest, the 17.5% tax that is not paid could multiply into a huge amount beyond expectations.

      See also: Headmaster Can’t Stay In His Bungalow, Now Lodges In Boys’ Dormetory. [Get to know why]

      Now that you know, it is time to enjoy part of the national cake through tax holidays on the tier 3 contributions

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