The Ghanaian government has finally increased the base pay percentage for 2023 by 30%. How will the amount that will be added to one’s salary be calculated?
We will take you through the procedures for calculating the new base pay percentage of 30% in this article.
The calculation is unrelated to the Cost of Living Allowance (COLA). The COLA is a temporary benefit that is about to expire, especially since the base pay increment has been determined.
There are only two items that make up the total amount under a single spine structure. These are the retention premium and the single spine salary. With these factors in mind, the 30% increase is calculated.
In Ghana, how do you calculate a 30% base pay increment?
Multiply your Single Spine Salary (SSS) by 30% and add the result to your initial SSS to calculate the Base Pay percentage. Calculate the retention of 15% of the new SSS and multiply the new SSS by 15%. To calculate your new gross pay, add the new single spine to the retention premium.
Formulas for calculating 2023 Base Pay
- If your salary for a single spine is GHS 2091.26,
- 30% of 2091.26= 627.39
- SSNIT is 5.5% of the increment done.
So 5.5% of 627.39=34.51
So Remaining 592.88 out of the increment done
- VAT is now 20% of the remaining increment done.
So 20% of 592.88=118.58
So remaining ghc474.30
- Now you add the ghc474.30 to your single spine salary
2091.26 + 474.30 = GHS2565.56
- GHS2565.56 will now be your new single-spine salary.
- 15% of the 2565.56 is retention premium
15% of 2565.56 = 384.83
So 2565.56 + 384.83 = 2950.39l
- It is from this GHS2950.39 that loans, dues, insurance policies, and any other subscribed policies will be deducted. If an individual has Tier 3 running, then 16.5% of the GHS627.39, which is GHS103.52 will be taken out before the SSNIT and tax are taken, hence the payment tax will be lesser.