ACCESSING YOUR PENSION BENEFITS: IS NOW REALLY THE BEST TIME?ACCESSING YOUR PENSION BENEFITS: IS NOW REALLY THE BEST TIME?
June 23, 2020
All businesses and companies are going through a most difficult period with their operations shook by the global COVID-19 pandemic. Most of those deemed non-essentials like entertainment centers; clothing stores, beauty shops among others have taken a break off all business operations. Several workers have been laid off or have received a pay cut due to this unforeseen situation. As a result of this, a good number of people are under some form of financial pressure and are forced to make aggressive financial decisions like reducing expenditures, eliminating recreational needs, picking up a side hustle, etc. just to survive.
Along the lines of digging into financial savings, the pension fund withdrawal idea has been brought up for a conversation in many circumstances. People ask, “why can’t I access my pensions now that I am in dire need of money?” The underlying thought of this question indicates that most pension contributors do not recognize the essence of having a retirement savings account.
As a worker, whether currently employed or not; the Contributory Pension Scheme (CPS) was created specially by the National Pension Commission (PenCom) to help you to save towards retirement; a time when you may no longer be ABLE to work and not necessarily a time when you are OUT of work. The main objective is for every person that works in the public or private sector including the self-employed to enjoy retirement benefits as and when due. This is a form of social security against old-age poverty, which has posed as a societal challenge and burden on the Government over the last few years. As you grow older, the capacity to work reduces, and there is the likelihood of having little or no access to finance when you are no longer in service. Taking a deep into your pension contributions now could lead you to have insufficient funds to sustain you when that time comes. You wouldn’t want to experience that after working so hard for years.
It is important to understand that your retirement savings account (RSA) doesn’t function as your regular bank’s savings or current account where you can withdraw as frequently as you would like. The funds are invested in financial instruments that yield best when allowed to grow uninterrupted over a long period of time.
Undoubtedly, situations may arise before retirement, resulting in thoughts of accessing your benefits early. Since withdrawals are not permissible except at retirement, one can access a percentage of his/her funds in special cases such as temporary loss of a job, which is subject to approval by the National Pension Commission (PenCom).
The retirement savings scheme is structured to help you earn during your less active years in life through benefit payment methods like Lump Sum and Programmed Withdrawal. Requesting to access your pensions now no matter how small isn’t an advisable route. This little act may hinder you from living your dream retirement as a possible result of inadequate savings that will be enough to support that lifestyle.
If you are still in doubt about this, click here to discover and ascertain if your current pension contribution (whether employed or recently laid off) matches the standard of living you hope to have after you retire.
You are strongly advised to resist the temptation of accessing this growing pot of gold as much as you can until retirement. Your future deserves all the financial stability it can get, and with your help, we can guarantee that.
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