It is not uncommon to hear people looking for business ideas to invest in right about when they’re heading for retirement, or even shortly after settling into retirement phase. The sudden interest in “running a business” to some people seems plausible, but again, why the sudden interest to “start a new business” when a person no longer has the advantage of “youthfulness and time to run around”?
Perhaps, there is need for people to have more faith in the pension fund system and avoid subjecting what should be their retirement benefits to the risks of untested businesses.
Pension funds are pooled contributions from pension plans set up by employers and other organizations to provide for the employees’ retirement benefits. Pension funds are large investment blocks in most economies and a major factor in the stock market. These funds are managed by professional fund managers and fall under the institutional investor category. Pension funds are often exempt from capital gains tax, and earnings from their investment portfolio are tax exempted.
Michael Olafusi, a business data analysis expert remarked that “Till I resigned from paid employment, I used Stanbic IBTC Pensions. They send me monthly account statement. My money has been growing despite no new deposits since March 2014 when I resigned from my last job. It has been growing even better than my stocks investment (till stocks took off astronomically few weeks ago).”
“The main idea of government making pension compulsory is that too many people don’t save for after retirement,” said Olafusi.
Olafusi further said “In my training classes for some pension companies, they often complain of how some retirees think they are smart and request for the withdrawal of their pension accumulation upon retirement instead of having a monthly salary-like payout. And the business they didn’t try when they had youthful energy and more in sync with the world, is what they are now trying to do in their old age.
“They go into filling station business, bakery, real estate and all sorts based on friends/family advice. And in many cases gamble away the money,” he explained.
Contrary to the notion some may have; the money in pension fund is not lying fallow. It is invested according to stipulations by law, in mostly low risk investments like Government bonds.
In the bigger picture, pension funds are in the national public interest and the legislative language explicitly defines such funds in various laws. Pension funds perform important economic functions, such as mobilizing and managing savings, providing income stability, making labour markets more efficient and providing exposure to systemic risk in the financial markets.
CALEB OJEWALE
