Fi­nan­cial fit­ness

Public Sector Manager - - Contents -

Why sav­ing for you re­tire­ment is im­por­tant

Most of us start work­ing in our early twen­ties, full of dreams and plans for a bright fu­ture. For most of us this is the first real en­counter we have with fi­nan­cial plan­ning and hav­ing to be re­spon­si­ble for our fi­nances.

Dur­ing our school years most of us do not deal with fi­nan­cial mat­ters. We are only ex­posed to ba­sic ed­u­ca­tion but not taught how to man­age our money. As adults, we have to learn as we go along and, with­out be­ing taught ba­sic fi­nan­cial lit­er­acy, it of­ten leads to a long and com­pli­cated re­la­tion­ship with money.

We learn that sav­ing for re­tire­ment is es­sen­tial. We come to re­alise that on our payslips there is a por­tion of money al­lo­cated to re­tire­ment sav­ings.The aim of this is to en­sure that we will have money to as­sist us dur­ing our re­tire­ment.

But when we are young re­tire­ment seems like a life­time away and there are more im­me­di­ate needs to be met. Ide­ally, we should be re­ceiv­ing ad­vice that tells us that it is al­ways best to start sav­ing for re­tire­ment as soon as one starts earn­ing a salary.

With­out fi­nan­cial ed­u­ca­tion there's the risk of get­ting our­selves deep into debt and to start think­ing about ac­cess­ing our re­tire­ment money.The ap­par­ent ac­cu­mu­lated large sum locked in our re­tire­ment fund can surely as­sist us in get­ting out of this im­me­di­ate and loom­ing ‘tem­po­rary fix' called debt? We start think­ing of ways to get our hands on this money by, for ex­am­ple, ten­der­ing our res­ig­na­tion.

The op­tion to cash out a pen­sion and take a lump pay­ment can be tempt­ing. But it is far bet­ter re­main in ser­vice and con­tinue to build our re­tire­ment nest egg so that we can rely on pen­sion ben­e­fits that will largely keep pace with in­fla­tion for the rest of our life af­ter re­tire­ment. This can only hap­pen if we be­long to de­fined ben­e­fit funds such as the Gov­ern­ment Em­ploy­ees Pen­sion Fund (GEPF).

The GEPF affirms that the well­be­ing of all of its mem­bers and pen­sion­ers is the rea­son why it ex­ists and en­cour­ages mem­bers to save while they are still work­ing so they can be ad­e­quately pro­vided for in re­tire­ment.

Ben­e­fits of re­tir­ing with the GEPF

The GEPF is a de­fined ben­e­fit fund, which means that the pen­sion ben­e­fits are paid as an an­nual pen­sion (payable monthly) that is guar­an­teed for life.The GEPF has a solid track record when it comes to safe­guard­ing the value of ac­tive mem­bers' re­tire­ment sav­ings and pro­tect­ing pen­sion­ers against in­fla­tion.

The ben­e­fits of re­tir­ing with GEPF in­clude a life­time pen­sion for the pen­sioner and ac­cess to ben­e­fits such as spouse/life­time part­ner pen­sion, or­phans and qual­i­fy­ing chil­dren with dis­abil­i­ties and the fu­neral ben­e­fit which do not come from the mem­bers' pock­ets. Fur­ther­more, mem­bers who re­sign lose es­sen­tial things such as med­i­cal ben­e­fits.

The pri­mary role of the GEPF is to pro­tect the wealth of its mem­bers and pen­sion­ers by safe­guard­ing their re­tire­ment ben­e­fits through proper ad­min­is­tra­tion and pru­dent in­vest­ment.The GEPF has paid pen­sion in­creases that largely com­pen­sate pen­sion­ers for in­fla­tion and, where nec­es­sary and af­ford­able, catch-up on in­creases too.

Sav­ing for re­tire­ment is es­sen­tial if we want the free­dom to en­joy our re­tire­ment years.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.