FINANCIAL PLANNING

A secure and happy retirement is every worker’s dream. Thus we look forward to retirement to be able to rest as often times our active years become so busy with building a family and making sure that they are well taken care of. In this part of the world where there is no clear statement of policy regarding social security, planning your retirement becomes even more imperative. The various hazards and vagaries of the social life could bring about unfavorable circumstances that lead to loss or cessation of income or means of sustenance. Notable among these hazards are sickness, accident, and old age, death of breadwinner or unemployment.

As Nigeria does not have any social security system to take care of the individual under these circumstances, you need to take your financial future very seriously. Recent studies have shown that we are living longer and healthier lives than our parents and grandparents did. On this ground, we can expect to spend more time in retirement than they did. But you will remember that our grandparents even sometimes our parents, were totally reliant on the generosity of other people, sometimes even for food, otherwise, they would go totally hungry. If you save more today, you get to spend more at old age. Saving towards pension also reduces the tax burden we bear as pensions are allowable deductions for tax purposes. We all want to be able to sustain the lifestyle we are accustomed to even after our active employment years.

The first question to answer in this direction is what financial resources will be necessary to support that lifestyle? Experts estimate that you will require about 50% of your preretirement income to sustain your lifestyle post retirement. Inflation accounts for the major part of this estimate; given the prevailing inflation rate, it takes an average of 10years or less for the price of food to double. Also, health bills have proven to increase rapidly as one begins to age. Besides, higher retirement benefits can be very important to you later in life and increase the future benefit amounts your family and your survivors could receive. With the new pension scheme, the benefits you receive post-retirement becomes a function of your contribution into your pension account and the interest earned thereto. We, therefore, encourage you to take charge of your financial future and start saving more by opening a Retirement Savings Account (RSA) with Sigma Pensions Limited today to be able to guarantee a happy retirement.

Saving has proven to be a very worthwhile habit. So if you are already saving keep going. If you are not saving, it’s time to get started. If you start today to save towards your retirement, you will certainly benefit from that decision. The sooner you start saving, the more time your money has to grow. Saving for retirement should be your priority. Thanks to the new pension scheme, retirement savings are deducted at source from your salary and remitted to your PFA. If that is not the case for you, then you need a plan immediately. Once you have made a plan, stick to it. There is no limit to the amount you can save for your retirement; it all depends on the financial resources you require to support the lifestyle you desire at retirement. You are also free to make additional Voluntary Contributions (AVCs) to your RSA to augment the size of your monthly contributions. One advantage of these contributions scheme is that there is no need for you to open another RSA as these contributions would be made directly to the existing account. All you need therefore is to notify your employer of your intention to make AVCs.

You can still continue to contribute to your RSA even when you are retired but still maintain a steady source of income. The idea is to set aside as much as possible consistently every month so that you can access such funds when you are no longer productive and do not have a source of income.

The Pension Reform Act (2004) provides that pension assets shall be invested with the objective of the safety of funds and maintenance of fair returns on amounts invested.
At Sigma, our investment philosophy is anchored on these objectives. The thrust of our investment function is to consistently improve investment returns by maintaining optimal portfolio within approved risk parameters in accordance with relevant Guidelines. We pay close attention to our investment strategy and asset allocation, and we regularly evaluate and review the performance of investment portfolio with a view to consistently improving investment returns and ensuring the safety of funds.