Mr Stanley Ogoe, Takoradi Zonal Head of the National Pensions Regulatory Authority (NPRA), has implored employees to ensure income security in their retirement by planning and investing in their pension while in active service to make their retirement days livable.
He observed that when people retire they experience a reduction in income, but a pension makes up for some of this loss of income in retirement, and pension schemes can provide protection in the form of lump sums and pensions to dependants in the events of a member’s death.
Mr Ogoe, therefore, called on employees to have a plan for obtaining financial resources by planning and managing personal finances, planning their spending through budgeting, saving for long term financial security, having controlled buying habits, investing earned resources, ensuring acquired assets (risk management), and embracing financial advice and researching a lot.
Mr. Ogoe who made this known in an interview with Spice Fm in his office said, poor management of personal finances such as lack of financial goals, skewed lifestyle habits, uncontrolled purchasing habits, low savings, low asset/capital accumulation, and cash flow crisis as some factors that contributed to poor life after retirement.
He noted that to encourage pension schemes, the State provides tax relief on contributions made to pension schemes and the growth in their investments and mentioned the three pillars of retirement income as social security, personal savings and employer pensions.
He defined pension as a source of guaranteed retirement income provided by an employer to employees who have qualified for this benefit, and traditional pension plan as defined benefit pension plans, which guarantee that employees receive a certain amount upon retirement regardless of the performance of their investments to ensure that employees received a predictable income each month once they reach retirement age.
He explained that one’s pension benefit usually increased as he/she accumulates additional years of employment with an employer and to be eligible for a pension benefit one usually needs to work for an employer for a certain number of years.
“Once you know what to expect from the pension plan, evaluate it alongside other retirement income sources and change your savings strategy as needed to retire comfortably”, he opined.
He also indicated that the vision of the NPRA was to ensure retirement income security with a mission to regulate pensions through effective policy direction to secure income for the retired in Ghana.
He further explained that “if you intend to spend several years or even your entire career at one company, it may make sense to participate in the pension plan since you are more likely to become fully vested in the plan, which would entitle you to use all of the benefits that you accrue in the plan.
However, if you work in the private sector or plan to work for several public-sector organizations throughout your career, you may not benefit as much from a pension plan because you may not become fully vested”.
Story: Seth Ameyaw Danquah
