LEVERAGING ON THE MULTI FUND STRUCTURE- A VIABLE INVESTMENT FOR A HAPPY RETIREMENT-ODUNZE REGINALD C

 

 Images credited to Daily Express

The National Pension Commission recently came up with the multi fund structure, a structure that will tackle the investments need of contributors according to their risk appetite and I quote “The National Pension Commission (“PenCom”) recently Amended Regulation on Investment of Pension Fund Assets for the Pension Industry. The new investment guideline introduces a multi-fund structure, which would replace the “one size fits all” structure that puts all active contributors into one Retirement Savings Account (“RSA”) Fund without consideration for age or risk profile of such contributors”

The Multi-Fund structure is a framework that aims to align the age and risk profile of RSA holders by dividing the RSA Fund into four distinct Funds. The current RSA Fund will be sub-divided into three separate Funds, while the RSA Retirees Fund would be the 4th Fund.

A clear picture of this noted that fund 1 will be exposed up to 75% of variable income instruments, fund 2 up to 55% , fund 3 up to 25% and fund 4 up to 20%. Variable income instruments  are investments that generate income or returns  that cannot be ascertained  from the date the investments were made, not only that the prices of such instruments fluctuate daily, these instruments include ordinary shares, collective investment schemes(CIS), these include mutual fund, Real Estate Investment Trust , Infrastructure Funds and Private Equity Funds . Such investment can generate high returns on the long run but could be risky  as result of uncertainty and unexpected fluctuations in market prices and returns.

So what this portends, it all means that all things being equal there is the possibility of  sustained increased in pension pot folios, investment and a return on investment at the long. Will it give our retirees, a happy retirement ?

Dona Rosato in her article captioned “5 Secrets to a Happy Retirement” noted that Towers Watson happiness survey found that retirees who rely mostly on investments had the highest financial anxiety. Almost a third of retirees who get less than 25% of their income from a pension or annuity were worried about their financial future; of those who receive 50% or more of their income from such a predictable source, just under a quarter expressed the same anxiety”

Continuing Rosato noted that “More money makes you happier. Once you amass a comfortable nest egg, though, the effect weakens, says financial planner Wes Moss. For his recent book, You Can Retire Sooner Than You Think:The 5 Money Secrets of the Happiest Retirees, Moss surveyed 1,400 retirees in 46 states. The happiest ones had the highest net worths, but Moss found that money’s power to boost your mood diminished after $550,000”

According to an article in Yahoo Finance captioned “7 ways to Retire happy” Mandi Woodruff opined that  In a new book, “You Can Retire Sooner Than You Think,” Atlanta-based investment advisor Wes Moss, offers an alternative to the traditional line of thinking. Rather than focus on a dollar amount to reach for, Moss decided to figure out what retirees needed to be truly happy in retirement”
“I wanted to go beyond simple income numbers,” Moss says. “I wondered what it really takes to get somebody to a point where they truly feel they have a cushion and they are also enjoying life.”
“In 2012, Moss conducted an online survey of more than 1,200 workers who had either already retired or were fewer than 10 years away from retirement. He asked them questions about what type of cars they drove, where they shopped, how much their homes were worth, and, of course, how much they had saved for retirement. But he also asked about their passion projects, how often they went on vacation, what types of volunteering they enjoyed, whether or not they were satisfied with their lives, and how much time they put into their retirement planning before calling it quits. (Moss did not ask participants about overall debt levels like student loans and credit cards, but did include questions about their mortgage debt).”
What he found was that more money doesn’t equate to more happiness. The happiest retirees didn’t all drive BMWs or take 12 European cruises a year, either.”