10 COSTLY PENSION MISTAKES MILLIONS OF NIGERIANS MAKE
According
to recent research, the latest life expectancy figures reveal that a 6o year
old pensioners today are expected to live off their pension for an average of 15
years- this is nearly a quarter of their whole life. That is why if there is any pension
mistake it could cost more.
According to Robert Kiyosaki (1999) in his book ‘Cash flow quadrant, the Rich dad guide to
financial freedom’ he noted that people invest for two basic reasons,
· To save for
retirement
· To make lot of money
The
first one underscores the importance of pension schemes, but people make
serious mistakes in pension and they are as follow:
1 Not interested
Most Nigerians
are not interested to making pension contributions, they are argued that their
parents loose out in the old schemes, because they were unable to access their
fund , having been marred by corruption, irregularities, government bureaucracies
, no adequate data base, they argued that the scheme failed and as such, the
present one will also fail. By that they refused to present themselves for
pension registration.
2 Misconception about the scheme
and influence from the employer.
Most people
feel that the pension system is like the banking system where they can have two
or more account numbers. They entered the scheme with such mind set and as such
they are engaged in double and multiple registrations. Most employers are also influencing the
employees by letting them re –register, the reason being that they are using
this Pension Fund Administrator or the other. There is also the unethical practice of most pension fund
administrators who are engaged in double and multiple registrations.
3 Not saving enough.
Almost
more than two third Nigerians of working populations do not have a pension
account, including the informal sectors, those with various state governments
and other categories too many to mention. Also the savings are not enough as
people are not keying into voluntary contributions. What they contribute is
basically not enough to carry them.
4 Delaying Savings.
Most employees
do not readily make themselves available for pension registration even when the
employers have indicated interest in embracing the scheme. They have
lackadaisical attitude towards enrolling in the scheme. They do not know that
there are investments on the pension contributions. Even among the government
employees they still find it difficult enroll, even when their money is deducted
at source from the Accountant General.
5 Not checking if they are
getting real value for their money
People are not always interested in the
pension money until few months to retire, and as such they do not know what is happening to their contributions
if at all they enroll.
6 Not getting proper enlightenment before
Retirement
Research has shown that what people did not
achieve in their youthful age they tend feel they can achieve it during their old
age. They have that erroneous feeling that the pension money can do all things.Therefore pensioners have that mindset that the pension money will be
target for one or two things, they could not achieve earlier in life. Most retirees
have the mindset that they will collect all the money in the retirement saving
account. They always say, the money belongs to me why pay me 25percent , why
not pay all, or even 50 percent. Most of them are not aware of the Pension
Reform Act 2004.
7 Using
Retirement money to marry wife and buying a car.
Most retirees end up using retirement money
in marrying new wives and procuring new cars. By so doing they attract people’s
attention to their life, they also end up having issues with their immediate
family especially their first wife who now feels alienated, even though they
not know that marrying a new wife set
aside the existing will, if there was no update of the previous will.
8 Not checking your pension pot
Tom Macphail in 10 costly Pension Mistakes noted
that “If you have a pension, have you ever reviewed it? Millions of
people haven't. Moreover, recent research revealed more than two in five adults
(41%) - 8 million people - cannot remember how their pensions are invested. Why
is that alarming? Performance can vary quite dramatically across investments
and even a seemingly small difference could have a significant impact on the
size of your pot” Continuing he stated
that these are just projections. Investments will not always go up in value,
they also go down, so you could get back less than you invested; what is
certain is that they won't perform as predicted. Also, these values are in
today's terms, without considering inflation, which will reduce the spending
power of your money over time “
Therefore
checking your pension pot is very essential in avoiding mistakes.
9 Relying on Retirement fund.
Many rely on the retirement fund, they build
castle on their mind with the retirement fund, they fantasized on what and what
they could do with the retirement money, only to be disappointed that the money
is not big enough.
10 Having
a negative attitude.
Some people
have that mindset that they will not live to see their pension and the Biblical
Job what they fear most always comes to them.
In my experience in talking to people about
pension, some will always say will I live to have the pension? I always tell them, to
maintain a positive attitude towards life.
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