‘Planning for retirement should start the day you took employment’
The spectre of retired Nigerians, especially those who were in government employment, falling down dead in queues just to collect paltry sums has continued to worry many. With government resources dwindling daily, what form of respite can retirees get? How would those in employment now fare years after they retire? What about artisans who are not in formal employment, who looks after them? A retired human resource expert and Chief Executive of Karisma Consultancy Associates Ltd, Mr. Izevbua G. Ogunmwonyi, has provided useful insight into retirement issues as they relate to poor saving culture, lavish lifestyles and poor social expectation. Ogunmwonyi has also drawn from his own experiences to write a book, Retirement and You: A Compendium of Retirement Best Practices that explains retirement imperatives
What inspired you to write a book on retirement?
I have been in human resource all my life; I have retired people when they work. I have carried out this assignment the organizations where I worked. And during that time I realised that they usually looked rather haggard, not having anything to fall back on after retirement since they were not able to cater for themselves.
Moreso, when I retired and started my own consultancy outfit, I was one of the consultants selected by the Bureau of Public Service Reforms in the Presidency to carry out workshops for about 35 – 40 thousand retired civil servants between 2006 and 2008. I carried out most of the retirement seminars. During that time, too, I taught them what to do when they retire. And the questions and answers that I got from them are indicative of the fact that they needed to have been prepared well in advance for retirement. Throughout the seminar, I started making up my mind that these issues that we discussed, they could be put in a book for them and others to read at their spare time before retirement.
That was the beginning of my thinking about writing on retirement. The idea started maturing when I ran other workshops on management. And now being retired myself, and I didn’t have anything to fall back on, I felt that this was the time I could draw from my experiences to guide other retirees. All the privileges I enjoyed when I was working were no longer there, likewise the friends I made at work, and I had to start creating new friends. When I was carrying out research for the book I discovered that if one is not careful, you could become a nuisance when you visit your colleagues regularly in the office. All these put together really made me sit back, talk about it in detail, carry out research, and that was how the book was borne.
So, it became easy when I started thinking about writing a book; I started calling on my experiences all the while that I worked in different companies as head of human resources.
So, at what age or time should an employee start preparing for his or her retirement?
Now it is very clear to me that it should start when a person takes up employment. What I teach is that as soon as you start work, you should also start thinking about retirement and start planning for it. Then you start saving and also invest the product of your savings, and think ahead. It becomes critical when it is about 20 years or 10 years to your retirement and you begin to look at the savings that you have made. Then you begin to know and feel what it is likely to be when you retire. It is basic to do this, but in the book that I have written, you will learn to get ready even earlier, and more seriously the examples in the book will warn you to start getting prepared by taking issues into your hands early.
In fact, I am thinking of doing a second book on retirement, where I will talk in detail about retirement planning, and critically examine the years between 2004 and 2014. In retirement, you have issues of family, issues of finance and issues with the economy; nobody knows what the economy is going to be like tomorrow. So, these are the things one needs to be prepared for. My book contains a lot of advice to anybody who is working now.
One thing I have come to understand as a human resource expert is that is no amount of salary could be enough. One thing about saving is discipline, and learning to use money well.
Saving is a challenge. What measures do you propose to overcome it?
When you look at our environment, it is possible to think that when you start work, you need to start saving, because our environment does not let you work at your own pace. Learning the habit to save is a great discipline and it is very difficult for anybody to do, especially the young ones who are used to cheap money, and peer pressures. These societal issues push people to feel that it is very difficult to save. But if you take your savings as tax, which you do not have immediate access to then it becomes a habit.
How does Nigeria’s poor manufacturing, innovative sector impede retirement plans?
A great deal! We live in a society where we don’t produce yet we want to live far beyond our means. Even in this era of conspicuous consumption we can still live within our means. That is why people look at us as being corrupt, but corruption is not in us. It is in our environment that we copy. The government should also make sure that we have the basic amenities – good road, electricity, good schools, and then we will begin to see things differently. But having said that, when you retire you retire alone. You don’t take anybody with you.
So, what role does insurance play in all this?
The idea of insurance is a very good one, but our perception of insurance in Nigeria is poor. People will tell that when you have accident, the insurance company will not pay, but the good ones pay if you know how to structure your case well. You should look for insurance company that has a name and a good pedigree. Life is better now; people are living longer because of the facilities that we have, and we have more understanding about dieting. If you have insurance cover, it is very good; it is also free from tax. It is highly encouraged; anything that would help you put money aside towards your retirement is good.
It doesn’t have to be only those in formal employment; self-employed artisans can also imbibe the culture of saving something aside for their retirement. Imagine an artisan saving N500 every week for 20 years or more.
Don’t forget that by the time you retire, you are weaker; your reflexes are duller and your agility is reduced. So, if you retired at 60, you may still have 30 to 35 years to live. Some people even live up to the age of 100, and you find them with acute presence of mind. In the long run, it shows that we are not dead after all when we retire.
In your view, are the pension fund administrators (PFA) living up to expectation?
With regards to the issues of pension Acts 2004 and 2014, we are still having agitations that retirees are not being paid their dues when it falls due.
The Act repealing the Pension Act 2004 came into being on July 1, 2014. Amongst other things in the Act is that those having less than three years to retire are not covered by the Act, and will be paid pre-2014 benefits whereas those having three years and above to retire will have their contributions pre-2014 put in a sinking fund. When they retire the money in the sinking fund would be added to the contributions (staff and employers) made post 2014. It is the cumulative total that the pensioner would receive variously at retirement.
The Pension Commission staff (Pencom) are now better trained and motivated to perform their roles. Do not forget there are 23 Pension Fund Administrators (PFA) out of which the employees can have Retirement Saving Account (RSA) with. There are likely to be healthy competition among them to the benefits of employees. All said and done, I believe that Pension Commission will perform their supervising roles better from time to time.
Today if you look at the frequency of complaints about none payment of pension, it is gradually reducing. So, the Pension Commission (PENCOM) will continue to improve. We cannot run away from the fact that the more we look after our pensioners, the more the society will appreciate pensioners’ contribution to the national economy.
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