RETIREMENT PLANNING
Planning For
Retirement Security:
Key Factors To Consider
By Samson Osero
P
eople employed before the mid-
90s, particularly in the civil service,
were certain of job security until
the specified year of retirement. The
obedient servants were on “Permanent
and Pensionable Terms” which would
only be withdrawn on disciplinary actions,
health grounds or returning to the Maker.
In 1998 under the Civil Service Reform
Program, the government for the first
time retrenched over 20,000 employees
in the infamous ‘Golden Handshake”
payouts.
The private sector caught up with the
retrenchment wave and nipped in the bud
career dreams of workers in their 20s, 30s,
40s and 50s. Retrenchment became an
office-hold name that caused cold shivers
in workplaces whenever it was mentioned.
In essence, it wound backwards the
retirement clock with enticing titles such
as Voluntary Early Retirement Program.
Unrelenting market forces, digitization of
work processes and business-unfriendly
legislation, among other factors, have
eroded job security to unprecedented
levels. Unlike two decades ago, employees
are now self-compelled to begin planning
for retirement from the first day at work.
Here-under are some factors working
people should consider in planning for
retirement security way ahead of leaving
paid employment for whatever reasons.
Financial Independence
Employees’ main source of income is the
salary they receive at the end of every
month. The money enables them to meet
living expenses; purchase assets; pay for
services and save for investments. On
retirement, the salary tap shall be closed
and replaced with pension payments most
of which are a pittance. Pension compared
to the salary on last pay slip cannot enable
one to continue living at the same lifestyle
as before. The key question to ask oneself
today is: What decisions should I make
now to secure my financial independence
during retirement?
Since the employer’s monthly pensions will
not be adequate, open and make contribu-
tions into a personal pension scheme in a reg-
istered financial services firm. At retirement
time, the scheme money can be converted
into an annuity receivable every month for
an agreed period. This annuity plus the pen-
sion will become reliable sources of income
to enable you meet some of your retirement
living expenses.
06 MAL35/20 ISSUE
Since the employer’s monthly pensions
will not be adequate, open and make
contributions into a personal pension
scheme in a registered financial services
firm. At retirement time, the scheme
money can be converted into an annuity
receivable every month for an agreed
period. This annuity plus the pension
will become reliable sources of income to
enable you meet some of your retirement
living expenses.
Other employees have increased NSSF
contributions above the minimum
statutory requirement. The total NSSF
contributions will be available for
withdrawal on attainment of 50 years.
Such a lump sum is more often than not
subjected with numerous expenditures
until it gets exhausted after a short period.
Retirees who obtain lump sum payments
from their pension schemes have wondered
over the lightning speed at which their
money wallet becomes empty. It reminds
them of people that win lotteries but later
on live in abject poverty. If you have an
on-going project that requires money,
the lump sum would be its ready source
of finance. Without such a project at
hand, the money may be squandered in
purchasing unnecessary goods or services
on impulse. The money will be soon
gone. The retiree will become financially
stranded claiming that the money was
cursed from the day it was received.
Retirement advisors have recommended
that lump sums be converted to annuities
to guarantee retirees with a regular future
income.