Don’t wait till employers ruin your retirement, buy deferred annuity today

Kindly leave a comment and share

Chuks Udo Okonta

Knowledge well applied is said to be power. It is unfortunate that many people have knowledge, but never do anything with it.

When I was privileged to lead a group, we engaged an insurance company to train us on annuity. The training exposed me to the benefits of deferred annuity which has a semblance of Micro Pension Plan (MPP), which I desired to subscribe to as sole proprietor, but couldn’t owing to the rules stated in the guidelines issued by the National Pension Commission (PenCom) that Retirement Savings Account RSA (holders) under the Contributory Pension Scheme (CPS) are not eligible for the micro pension plan.

With the knowledge acquired from the training, I opt for deferred annuity, taking up 18 years plan, which by the grace of God is presently running smoothly as I pay my premium quarterly.

It amazed me to hear my colleagues who attended the training still complaining of non pension contributions remittances by their employers, seeking the intervention of PenCom to assist them creating a window that would allow them make Voluntary Contributions (VC), without going through their employers.
They also keep appealing to PenCom to get their employers comply with Pension Reform Act (PRA) 2014 by ensuring they make contributions and remittances toward their retirement.

Though, it is statutory for employers to contribute and remit employees’ contributions to Pension Fund Administrators (PFAs), it is also necessary for employees to adopt deferred annuity to structure a separate retirement plan.

As I run my deferred annuity plan, I have resolved by God’s grace to ensure that at retirement, I should have a dual monthly retirement benefits payout – Retirement Life Annuity (RLA) and Programmed Withdrawal. This would be achieved by using my deferred annuity contributions to buy retirement life annuity, while my retirement savings contributions with my PFA, for programmed withdrawal.

For people in the informal sector, those doing their personal businesses, deferred annuity remain an investment haven to be leveraged in planing for retirement.

As there is no social safety net in the country to cater for the aged from informal sector, deferred annuity should be added to other investments options set for the future.

Benefits of deferred annuity

– Tax-deferred gains: Savings in a tax-advantaged account.

– Flexibility: The contributor decides what to contribute depending on his/her income

– Unlimited contributions: Higher earners can contribute beyond the maximum for traditional.

– En bloc payment. The contributor is entitled to the full contributions at maturity.

– Range of benefits: Additional perks such as survivor’s benefits, death benefits and a guaranteed minimum lifetime payout.

– Time: Deferred annuities give money more time to compound, boosting the payout.

– Supplemental retirement income: Deferred annuities can supplement other retirement income, like Social Security.

– Variety: Deferred annuities come in fixed, indexed, and variable types, allowing for a range of investment options.

– Guaranteed income: Deferred annuities provide a guaranteed income stream in retirement.

– Death benefit: Deferred annuities often include a death benefit component for heirs.

– No will nor letter of administration. Beneficiaries do not have to tender a will or letter of administration to claim fund in case of the of the contributor.

One of the uniqueness of deferred annuity is that contributors can opt for inflation linked product to ensure that their fund stays above inflation.

Now that you have acquired this knowledge, ensure you apply it and never sit waiting until employers ruin your retirement life through non contribution and remittance of pension contributions.

As you take the move to buy this product, please ensure you conduct Know-Your-Insurer (KYI) if you buying directly from an insurer, but if you don’t have the time for such buy through a registered Insurance agent or broket.

Good luck.

Leave a Comment

Your email address will not be published. Required fields are marked *