15 COSTLY PENSION MISTAKES MILLIONS OF NIGERIANS MAKE-Odunze Reginald

15 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 is any pension mistake could cost more, and 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 employer 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 deduct 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. 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.

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.

 11 Failing to update records

12 Revealing pension information tio their family members

13 Inability to have will, this will then lead to getting a letter of Administration and its attendant issues.

14 Registering  with one Pension Fund Administrator  because family members are working there.

15 Not including the exact permanent address and the phone number of the next of kin.