The 5Rs of Pensions- Odunze Reginald C

Pension annuity incomes 'hit all-time low' - Telegraph

www.telegraph.co.uk620 × 387Search by image

Savers have seen their annuity incomes fall to a reported all-time low

Images may be subject to copyright.Send feedback

And as Robert Kiyosaki  will say his book Rich Dad, Poor Dad that  “an individual’s reality is the boundary between faith and self confidence, and a person’s financial reality will not clear until he or she go beyond the fears and doubts of his or her own self imposed limits. Be as a time will come when a retire will exit

Retirement: This is the normal retirement based on the 35 years of service or 60 years of age, it may also arise as a result of medical impairments where the employee may be advised to retire on the advice of a medical board.  Section 2 subsection a b and c and section as it relates to medical issues of the Pension Reform Act 2004 and section 7 subsection 1, paragraphs a, b, and c PRA 2014

Retrenchment:  This is where the employee had been disengaged as a result of one or the other, which may be limited to organizational restructuring, acquisition and merger or any other factor that may result in the loss of job. Sect ion 7 subsection 2 PRA 2014

Right sized: where the employee was disengaged as a result of not meeting up with requirements of qualifications etc

Redundancy: where in the interest of company, the employee may be disengaged as a result of the company not doing well, or the company is transiting to another, or is changing business and structures, or they are not getting contracts as in most construction companies. There is the likely of being called back in Redundancy.

Resignation: In resignation, the employee out of his own decision may exit, he may have been offered a better opportunity, or is leaving for a private business, politics, and leisure. In the previous act ,PRA 2004 the scheme did not make provisions for resignation, except in some instances in the banking sector, where they may be advised to resign against their will in order to ensure their record  is not dented, but in the PRA 2014, all the provisions of exit were clearly included.

It should be noted that at the point of entry, organizations has clear cut information on exit strategy. What then will employees do? The best they can do is to adjust their own exit strategy so as not be affected, because most time exit may as a result of unforeseen circumstances. Therefore employees require careful planning, sustained contribution and an alternative investment option to be able to survive in the event of the one 5Rs appearing early in their working life.

One of the key issue of 5Rs is that early withdrawal always impact negatively at the long run both in terms investment outlay and the total pension pot or what we may refer as the total retirement savings account balances.

In article captioned  “4 dangerous assumptions that could hurt retirement plan” ,which appeared in Morning star,  Christine Benz noted that  ”Continued portfolio contributions, delayed withdrawals, and delayed Social Security filing can all greatly enhance a retirement portfolio's sustainability. Given those considerations, as well as the ebbing away of pensions, increasing longevity, and the fact that the financial crisis did a number of setbacks on many pre-retirees' portfolios, it should come as no surprise that older adults are pushing back their planned retirement dates. Whereas just 11% of individuals surveyed in the 1991 Employee Benefit Research Institute's Retirement Confidence Survey said they planned to retire after age 65, that percentage had tripled--to 33%--in the 2014 survey. In 1999, just 5% of EBRI's survey respondents said they planned to never retire, whereas 10% of the 2014 respondents said that”.

Continuing Benz noted that “With that in mind, there appears to be a disconnect between pre-retirees' plans to delay retirement and whether they actually do. While a third of the workers in the 2014 survey said they planned to work past age 65, just 16% of retirees said they had retired post-age 65. And a much larger contingent of retirees--32%--retired between the ages of 60 and 64, even though just 18% of workers said they plan to retire that early. As Morningstar.com assistant site editor Adam Zoll discusses and observed the following factors, -the variance owes to health considerations (the worker's, his or her spouse's, or parents'), unemployment, or untenable physical demands of the job, among other factors.”

                                                                                     

Odunze Reginald is the Lead Consultant, Chareg Consulting, a management and marketing  consultant  a social media and social marketing consultant , you can visit our twitter anchor @regydunze, find us on Facebook @ Reginald odunze and reginaldodunze.com, at google+ @ Reginald Odunze and at Linkedin@reginald odunze.