Mr. Wright had served in the Civil Service for numerous years; having secured employment upon completion of the compulsory national youth service. He was an outstanding performer and rose through the ranks to become the Director-General of his charge.
While in active service, he signed up into the Contributory Pension Scheme and his employer consistently remitted monthly pension contribution into his retirement savings account (RSA).
Some months to retirement, he contacted his Pension Fund Administration (PFA) to enquire about the current value of his RSA balance and he was notified accordingly. Moreover, the Customer Experience officer reminded him of the forthcoming pre-retirement workshop organized for intending retirees alike.
The pre-retirement workshop was to educate intending Retirees on the “Principles of Retiring Well” and the mandatory modes of pension withdrawal options; i.e. the Programmed Withdrawal (PW), a product of the PFA and the Life Annuity (LA) offered by the Insurance company. Both products are regulated by the National Pension Commission (PenCom) and National Insurance Commission (NAICOM) respectively.
The workshop extensively discussed the highlights as stated below on Programmed Withdrawal and Annuity Withdrawal options amongst other retirement related issues:
• For PW, The RSA are reinvested by the PFA to generate income/funds for the retiree and the profit/loss on investment is credited into the retirees’ RSA. For LA, the premium transferred to the insurance company is invested in a central retiree life annuity pool and income/loss earned belongs to the life insurance company.
• For PW, balances of retirement benefits remain in the retirees’ RSA and statements of account are issued to retirees’ quarterly or on request. For LA, balances of retirement benefits are in a pool of Annuity Fund (belongs to all members on annuity). Retirees on LA do not receive any statement of account.
• In case of death of a retiree, the legal beneficiary(ies) for retirees on PW will be paid the total remaining RSA balance. Annuity, on the other hand, is guaranteed for ten years. If the retiree dies within ten years of retirement, monthly annuity will be paid to the beneficiary(ies) as en-bloc for the difference in last payment period up to the ten years at a discounted value. However, if the retiree dies after ten years of retirement, no payment will be made to his beneficiaries. This is because the insurance company bears the risk/reward of investment.
Unfortunately, Mr. Wright was not able to attend any of the workshops organized for intending retirees.
On retirement and in attempt to access his retirement benefit, the Customer Experience officer offered an in-depth (qualitative and quantitative) analysis of the available benefit retirement options which was a regulatory requirement of the PFAs to the retirees to enable them to make an informed decision. At the end of the analysis. Mr. Wright had a better understanding of the two options but opted to process his documentation later as he felt the need to think through, before making his Choice. However, he left the PFA contemplating that he would have been better prepared if only he had attended the pre-retirement workshop.
• Retiring well involves making an informed decision
• The pre-retirement workshop is just as important as a bank cheque