We are in the first month of 2020 and most of us are determined to live through our New Year resolutions covering almost everything from habits, relationships, eating lifestyles, punctuality, spirituality and others. Resolutions should also include personal finances and how we would forge ahead. Retirement planning should have its fair share of the 2020 resolutions. As we know that time of fruit-taking shall surely come. This column has shared quite a number of facts over the last couple of months and we may need to pin some of them down as retirement planning resolutions for 2020.
1. Register with a Pension Scheme now
The potential for delayed registration into a pension’s scheme is quite high for self-employed individuals. Time has been identified as a factor for the growth of funds. Pension funds usually require decades to grow to adequate levels.
If any self-employed person has not yet registered and hasn’t started contributing, this should be the first resolution. Let 2020 be the year to register in private pension scheme and start to contribute.
One scheme you can consider is the United Pension Trustees‘ pension product called ‘My Own Pension’. This scheme permits individuals to flexibly contribute into a scheme. It has no age limit even for those who have left it too late. It should be noted that if an individual has already attained 45 years and above, they would not be able to register for the 1st tier pension with SSNIT. Therefore their efforts should be concentrated on the 2nd and 3rd tier schemes such as ‘My Own Pension’ , if they are self-employed and/or operates within the informal sector space.
2. Acquire basic knowledge on Retirement Planning
One other important factor to consider in planning for retirement is the basic knowledge of expected personal benefits. Expected benefits depends on what options have been put in place. Each option has what it brings. Against this background, it is worth knowing that each of the 3-tiers of Ghana’s pensions contribute a certain percentage of taxable gross salary.
Other supplementary options like a business or a property have what they bring. Another resolution would be to at least acquire a basic knowledge of what benefits are expected from pension contributions and other options. There are many sources of such knowledge. The author carries out such sessions for organisations and associations sometimes for free. It is worth taking time off your busy schedule to attend at least one or two of such sessions in a year. Experience has proven that people fall into hard times in retirement, not because they did not make enough money in their work life, but lack of knowledge robbed them.
3. Self-Monitoring of Retirement Plans
The long term nature of the fund brings in the third resolution. Monitoring of long term financial arrangement is critical to its success. In just the same way short-term financial schemes like a bank savings attract attention, long term pension arrangement should also get that attention. The third resolution for 2020 would be to monitor the performance and future relevance of all retirement options.
4. Seek Financial Advice
One resolution for people in 2020 is to seek financial advice when necessary. The era where one relied on recommendations by friends and family is over. The recent happenings in the financial sector have proven so.
Relatives who worked in failed financial institutions did not genuinely know what was coming, in order to alert their relatives who had invested in their places of work. Now siblings and friends are being blamed for loss of investments. Planning for retirement is a long term activity and as such regular advice is needed. Also, pensions can be confusing. Make it a necessity to seek for advise for retirement planning in 2020.
2020 promises to be an interesting time for pensions. SSNIT is no longer going to pay lump sum to pensioners. The private pension would fully assume payment of mandatory pensions.
Also, a lot of the economic indicators are expected to shift from what we have known for the past 5 years. The stock market is expected to slightly recover while treasury rates are expected to drop further per policy rate forecast. More importantly for pension funds the investment industry is expected to deepen and widen with the introduction of new asset classes and the deepening of the existing ones. This would give fund managers more options to invest our contributions. As a contributor you should have an idea what that means for you.
Today’s piece looks at just a four-point resolution for retirement planning.
Obviously we should know how resolutions can easily become self-broken promises if not followed through with discipline.
My resolution for 2020, is to keep educating and keep managing my pension funds well.
If you are retiring in 2020, may you Retire Richly. Happy New year to all
Author: Yaw Korankye Antwi
The author is a Pensions Expert