Pension Tier 3 refers to a type of pension plan or retirement savings arrangement. Here’s a general overview:

What is Tier 3 Pension?

Tier 3 pension plans are voluntary, individually managed retirement savings arrangements. They are designed to provide an additional source of income in retirement, beyond what is provided by Tier 1 (state pension) and Tier 2 (occupational pension) plans.

Key Features

• Voluntary contributions: Individuals can contribute a portion of their income to their Tier 3 pension plan.
• Portable: Tier 3 pension plans are typically portable, meaning individuals can take them with them if they change jobs.
• Investment options: Tier 3 pension plans often offer a range of investment options, allowing individuals to choose how their contributions are invested.
• Tax benefits: Contributions to Tier 3 pension plans may be eligible for tax relief or other incentives.

Examples of Tier 3 Pension Plans

• 401(k) or 403(b) plans (US): Employer-sponsored retirement plans that allow individuals to contribute pre-tax dollars.
• Individual Retirement Accounts (IRAs) (US): Self-directed retirement savings plans that offer tax benefits.
• Personal Pensions (UK): Individual pension plans that allow contributions to be made by individuals or their employers.

Benefits

• Additional retirement income: Tier 3 pension plans can provide a supplementary source of income in retirement.
• Flexibility: Individuals can choose their contribution levels, investment options, and retirement age.
• Portability: Tier 3 pension plans are often portable, making it easier to change jobs without losing retirement benefits.

Considerations

• Investment risk: Tier 3 pension plans often involve investment risk, meaning the value of the plan can fluctuate.
• Fees and charges: There may be fees and charges associated with Tier 3 pension plans, which can eat into returns.
• Complexity: Tier 3 pension plans can be complex, making it difficult for individuals to choose the right options.

It’s essential to consult with a financial advisor or pension expert to determine the best Tier 3 pension plan options for your individual circumstances.

A provisions store owner in Katamanso, Santeo, said she had no knowledge about the tier 3 pension scheme but after being educated about it and getting to know the benefits that come with subscribing to the scheme, she’d definitely start contributing towards her old age.

She said, she believes one day, she wouldn’t be able to go about her provision store business again, thus the need to subscribe to the scheme

Also, a teacher, Mr. Edward Boakye of Santeo K.K.M.A primary school, in the Kpone Katamanso Municipal Assembly said, he was aware of only the 1st and 2nd tier pension schemes.

According to him, he’d be glad to sign up for the tier 3 pension scheme as well. When asked why, he’d want to subscribe to the scheme, he said, he thinks it will help him in the future and also, help him achieve a good standard of living in old age.

Get to know more about Pension tier 3 with Paulina

As an individual, it is very easy to brush off the thoughts of retirement when one is young and energetic.

But then the earlier you start saving, the better it is to secure your financial future and this where the the tier 3 pension scheme comes to play.

By contributing to tier 3 pension scheme, you build a safety net for the future.

No matter how small it may be, consistency in contributing over time can add up, providing a stable source of income in retirement.

For employers, providing employees with a valuable benefit that can help them save and have a comfortable life after retirement, paints a picture of a caring boss in the minds of the employees.

With automatic deductions and a range of investments options, employees can enjoy a simple and hassle – free way to build their retirement savings.

So what’s the hold up?

In the heart of Accra, Samuel Boateng closed his small printing shop earlier than usual. At 62, his eyesight was failing, and business had slowed. For over 30 years, he had worked tirelessly, printing flyers, posters, and documents for customers. But now, as retirement loomed, one harsh reality stared him in the face—he had no pension.

For Samuel and many urban informal workers, the tier 3 pension plan had always seemed complicated. “I kept telling myself I’d start saving next year,” he admitted. “Now, it’s too late.”

His rent was due, his medical bills were piling up, and his children, though supportive, had their own struggles. Without a pension, Samuel had no choice but to keep working, even as exhaustion set in. “Retirement?” he scoffed. “That’s for government workers. People like me work till we can’t anymore.”

In Ghana’s cities, thousands of self-employed workers face the same fate. The Tier 3 pension plan exists, but awareness is low, and contributions feel impossible when daily survival is the priority. For many, retirement is not a time to rest—it’s a desperate fight to stay afloat.

Beyond Hard Work: Why Many Rural Workers Retire into Poverty

Sixty-five-year-old Kofi Mensah sat outside his small mud house in Domeabra, a Tier 3 community in Ghana. He had spent 40 years as a cocoa farmer, yet now, in retirement, he had nothing to show for it.

Unlike government workers in the cities who received monthly pensions, Kofi relied on irregular support from his children and the little he saved through an informal susu scheme. The Tier 3 pension system—designed for informal workers like him—was supposed to help, but few in his village understood it, and even fewer had enrolled.

One day, he walked to the nearest town to check if he could claim anything from the scheme. After waiting hours in line, he was told he hadn’t contributed enough. “So what happens to people like me?” he asked. The officer only sighed.

As prices of food and medicine rose, Kofi realized his future depended not on a pension, but on the goodwill of his family. In Ghana’s rural communities, retirement wasn’t about resting—it was about survival.

Kwesi wiped sweat from his forehead as he closed his small electronics shop in Accra. Business was good, but each month felt like a cycle—earn, spend, repeat.

One evening, while visiting his mother, he saw her struggling to stretch her small pension. She had worked hard for decades but was now dependent on her children to survive.

“I don’t want to end up like this,” Kwesi thought. But as a self-employed person, he didn’t qualify for the standard Social Security (SSNIT) benefits. There has to be another way, he mused.

The next day, Kwesi overheard a radio discussion on pensions while driving to work. A financial expert was explaining Ghana’s Tier 3 Pension Scheme—a voluntary retirement plan for both formal and informal workers.

“Tier 3?” Kwesi murmured. His interest sparked when the expert mentioned the tax relief and flexibility. He parked his car and called the station’s hotline.

“Sir,” the expert said, “with Tier 3, you can contribute regularly, withdraw after five years if needed, and enjoy tax-free savings. It’s ideal for business owners like yourself.”

Kwesi scribbled down the name of a licensed pension trustee and decided to take action.

That week, Kwesi met with a pension advisor. The process was simple—he filled out forms and committed to contributing ₵500 a month.

“Isn’t this too little?” Kwesi asked.
“Not at all,” the advisor smiled. “It’s better to start small and stay consistent. Over time, your savings will grow with compound interest.”

The thought of his money working for him gave Kwesi hope.

Six months in, Kwesi faced a rough patch—business slowed down. For a moment, he considered stopping his contributions. But remembering his mother’s struggles, he adjusted his budget instead.

By the third year, things improved. His shop expanded, and he increased his contributions. The Tier 3 account gave him the discipline to save consistently while reducing his tax burden.

Five years later, Kwesi received his first partial withdrawal. With it, he bought new equipment for his shop, which boosted profits. Despite withdrawing some funds, his savings kept growing steadily.

One day, his younger brother asked, “Kwesi, how do you always seem financially prepared?”

Smiling, he replied, “I learned to invest in tomorrow—through the Tier 3 pension scheme. You should too.”