Why RSA balance above one third of minimum wage can’t be fully access in retirement

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Chuks Udo Okonta

The Contributory Pension Scheme (CPS) on a daily basis is attacked by people who want the policies governing the system to suit their personal interest, not minding whether the interest of others are protected.

One of the groups of agitators, believe their total Retirement Savings Account (RSA) balance should be giving to them to start a new life/business at retirement.

Good as their arguments may be, this article will advance why their expectations can’t be met.

* CPS not deposit scheme

Unlike banks where customers deposit funds and withdraw at interval, the contributory pension scheme is not meant for deposit and regular withdrawals, but tailored towards old age benefits.

* Prevent old age poverty
One of the reasons for the contributory pension scheme is to prevent old age poverty, hence, the need to provide monthly pension benefits to retirees to enable them remain financial stable at old age.

* Financial risks

Findings have showed that most businesses started by people during retirement, 90 per cent of them fail. And when this happens the retirees loss their funds.
It is advised that retirees should never invest retirement fund in businesses they do not have requisite knowledge. To protect retirees from losing their funds, the scheme do not provide an opportunity for access to total RSA balance.

* Comfort in retirement

People having used their actives years to work, retirement period shouldn’t be a time of intensed hassle. People should do less work in retirement and enjoy monthly payments, which come earlier than normal salary.

* No social scheme

Due to lack of structured social scheme in the country, which would have cater for the elderly, leaving retirees without monthly, quarterly or yearly pension benefits will bred many poor aged citizens who may resort to begging in public places

What to do

Those calling for release of their total RSA balance, should endeavour to embrace other saving channels provided by insurance, finance houses, banks, capital market, real estate and more.

Embracing these channels will help them accumulate funds they can use to establish business of their choice, while also enjoying monthly pension benefits from their contributions in the CPS.

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