13 Jun

If contributing to a pension scheme at your workplace was voluntary, would you sign up? If there was no pension scheme at your workplace, would you consider having an individual savings plan?

If your answer to the above questions is no, then this article could help you have an appreciation of why having a savings plan is important.

It is a fact of life that while you may be working and earning an income today, there shall come a time when you stop working and your source of income may dry up.

Failure to have that income, may force you to significantly change your standard of living in retirement like not eating your favourite food or even moving out of the house you are living in now while your school going children may have to transfer to another school, which is not in line with your preference.

No one wants to experience such a downturn in life, but this may be the reality for the majority of people who do not have a savings plan, which is why having a pension plan is important so that you can maintain the lifestyle, which you enjoyed while employed.

It is important to understand that the major reason for having a pension scheme is to save for retirement so that one can get an income when

he/she is no longer generating income.

There are however, exceptions where one can claim a portion of his/her pension benefits when he/she leaves employment as a result of voluntary resignation, retrenchment, or dismissal.

A pension scheme member’s beneficiaries can also claim pension benefits upon the member’s death.

Whilst some people may feel that it is either too early or too late to join a pension scheme, it is never too early

or too late to join a pension scheme, it is never too early nor too late to plan for your retirement.

What is important is making the right decision to save for your retirement though an individual who joins early for instance, say in his/her 20s stands to benefit more than someone who joins in his/her 40s assuming they contribute the same amount.

In essence, the earlier one signs up for a pension plan, the more the money will accumulate in his/her fund, in the process guaranteeing them a better income when they retire.