Planning for retirement: Clearing misconceptions

Pension is one word that when mentioned, people, especially workers, become anxious and want to know what next. You will agree with me that it is one of the important factors in the life of every worker, whether in the formal or informal sector, but which has been given little attention.

People want to avoid the word pension because of experiences they have gone through as retirees.

Others do not want to hear it because of what they have heard and the views they have held about pension over the years. Some of these views can best be described as myths or misconceptions.

Many people have been negatively affected by these misconceptions and are unfortunately holding on to them.

Myths

One of the myths or misconceptions that have long made people worse off in their old age is that children are retirement benefits or packages. Hence the saying, “my children are my pension”. That is one reason why people tend to give birth to as many children as possible. Unfortunately, some workers have bought into this misconception over the years and, therefore, do not bother to put in place a retirement or pension plan.

They have put all their hopes in their children to take care of them when they retire. Yes, it is good and absolutely right for children to take care of their parents. However, the current socio-economic conditions tell us that we should not put all our hopes in anyone, not even our children. Gone are the days when jobs were readily available such that immediately after school, one got employed and was able to get something for oneself and one’s parents as well.

You may agree with me that things have changed and that there are no jobs guaranteed after school, therefore relying on your child or children as your retirement benefits is very undesirable, especially to think of it in the context of the current economic environment we find ourselves in.

If you ask 10 people the last time they sent money back home, your guess would be as good as mine. We should, therefore, put in place a proper retirement plan in order to live a decent life during retirement. The support from the children can be a plus if any.

For the old?

The second myth that has misled people into poverty at retirement is the misconception that pension is for old people. This is what many youth will tell you today. The fact that pension is mostly accessed by the aged does not mean that pension is only for the elderly.

Pension benefits are not only paid to people who have retired based on the statutory retirement age, but also to contributors who suffered certain contingencies such as invalidity. The invalidity in relation to pension means someone who is incapable of working due to certain conditions such as illness or an accident and this can happen to anyone even at a younger age.

In any case, for a better retirement and enhanced pension benefits, it is important to start planning at an early age to enable you to accumulate enough wealth to maintain your standard of living. We should not be thinking that retirement is far way.

Each passing day signifies that we are closer to retirement. Many people are living in poverty because they started thinking of their pension late in life when they were left with only a few years to retirement. It is, therefore, important to move away from this misconception and be concerned with pension-related issues as soon as we get our first employment till we leave active work.

Another misconception which has led some of the aged living in poverty is the idea that pension is for the formal sector workers and that informal sector workers cannot be part of any such scheme. Workers in the informal economy have carried this idea for many years such that when you talk to them about pension, the response is pension is for formal or salaried workers.

Unfortunately, retirement affects everyone whether you work in the formal or informal sector or whether you are self-employed,. There will be a time when you have to lay down your tools because your strength cannot carry that stress anymore.

This misconception has posed a challenge to efforts of governments and agencies in trying to extend the coverage of pensions to the informal sector workers. We should not continue to deceive ourselves as informal sector workers that we are not interested in anything pension.

Retirement will catch up with us whether we plan for it or not, whether we work in the formal or informal sector. Statistics indicate that informal sector workers constitute about 80 to 85 per cent of the Ghanaian workforce and, therefore, if this misconception is not dealt with, we will continue to have large numbers of Ghanaians living in poverty in the near future.

We should, therefore, clear our minds of these misconceptions and put in place a retirement plan to secure our future income security. We should take control of our future lives now that we have the strength and the means as young as we are and whether we are in the formal or informal sector.

Retirement is closer than you think and we must prepare to enjoy it.

The writer is an official of the National Pensions Regulatory Authority
Writer’s E-mail: f.anderson@npra.gov.gh