• Tuesday, July 16, 2024
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BusinessDay

To enjoy healthy retirement, save for it

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Everyone has a dream future, and we plan for this future depending on what our dream is. This is also applicable to individuals’ retirement plan. Depending on how you want to spend your retirement, there are certain questions you will need to ask yourself.

For instance, how much would I need for my retirement? What would I want to be earning monthly? Will I like to go on vacation annually? What other leisure activity would interest me? What about my healthcare needs? Do I have adequate healthcare insurance? Will I still be paying school fees in retirement?

Are my children old enough to take care of themselves? Will my spouse and I be depending on my pension to pay our bills?

By the time you have provided answers to all of these and many more questions not listed here, you would have known whether or not your present pension plan would be able to take care of all these needs or whether you would need to make Additional Voluntary Contribution (AVC).

If you are lucky to be working in an organisation that has more than three employees and also complies with the Contributory Pension Scheme (CPS) being supervised by the National Pension Commission (PenCom), then you have made a step forward.

But if you are not part of the scheme, then you have a challenge on your hands, and the only way out is to meet a financial adviser who will guide you, depending on your circumstance, on what pension plan you could arrange for yourself.

The CPS, which came into being in 2004 and recently revised in 2014, has promised to ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due.

The scheme is also meant to assist individuals by ensuring that they save to cater for their livelihood during old age, thereby reducing old-age poverty and also ensure that pensioners are not subjected to untold suffering due to inefficient and cumbersome process of pension payment.

In reality, what this scheme and your employer have promised you is at least a minimum standard of life in retirement. This is basic comfort, to ensure that you are not displaced or stranded in retirement. So, would you want to enjoy extra comfort or leisure in retirement? It’s you personal decision.

As the pension industry grows, the scheme will provide opportunities for primary mortgage, child education, etc. The additional contributions you make could be used to plan for your child’s education. If, for example, you withdraw a certain amount of money targeting your child’s education, five years down the line you can access it if need be, and it is tax-free, but if need doesn’t arise you leave it in your balance.

The CPS, right from inception 10 years ago, foresaw that some employees might have need to plan for bigger pack and so created opportunity for Additional Voluntary Contribution so that while still in active employment, workers could make additional savings. As experts say, if you want more money in retirement, then save more.

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