About Pension partial payouts
By Dr Lubinda Haabazoka
A pension is a payout either lamp sum or periodic payment made available to an employee when they are no longer in employment.
The main reason why pensions exist is to ensure that retired people have some form of income when they are no longer in employment.
Pensions help those that have made mistakes in life by not investing not to become destitute. Pensions are a cushion. They guarantee income when one is no longer in active employment.
I know people are super excited about accessing part of their pension for use now. Anyone speaking against this idea so far has been faced with insults. Some support is because of political reasons and for some it’s because they think it’s better they spend their money now and not later because there might be no tomorrow.
For a finance expert like myself, I would advise 100% against people accessing part of their pensions before they retire. The functions of a pension are to ensure you are not poor when you retire!
Some might argue that they want to invest the money today and not tomorrow. Some say they want to build houses or businesses today and not when they retire. If it’s businesses or houses we want to build, we can access loans against our benefits or salaries to build businesses or houses.
Hear me clearly, it’s your money so it’s your right to claim it. But when mistakes are made, just know that it should not be society’s problem to pay you social cash transfer or food packs when you retire having reduced your pension by an amount.
I propose that we reduce Pay as you earn by 5% and for that amount served, employees should contribute to mutual funds, unit trusts and have the right to withdraw their monies after a certain period.
The financial system has thrifts (building societies) that help workers save for building. The same system has mutual funds where one can grow their own savings. It also has credit unions, savings institutions and other investment vehicles. Pension funds exist to make sure that your have guaranteed income when you retire. If you won’t be there to enjoy the money maybe due to untimely death, that money is inheritance you leave for your children or dependants.
So my advice to government is that maybe we come up with another system where employees contribute their resources that they can unlock at certain points of their life.
In the 90s and early 2000s, a lot of people were pruned after privatisation. The majority of these people just ended up spending their benefits unwisely. Many died of depression and poverty.
A pension is a forced saving. Meaning government forces you to save money for the future. So if we now give partial payment to citizens, who will come and look after those that will make poor investment decisions? As it is, NAPSA payments are not even adequate. What more now when citizens get part of it before retirement?
On this one, no need of insulting. Am simply helping out. Looking out for you. Our life expectancy has increased colleagues so most of you will see out your pension.
My advise is that lets continue talking so that we can improve our financial system. There are a lot of mechanisms that we can introduce to ensure investment resources for citizens. Pensions need to serve their own purpose.
Thanks 🙏🏿