Enjoying financial security in the present is a difficult enough task, despite all the things we have under our control. Imagine then how much more precarious it is to have any form of confidence with regards days to come. With so many variables that we cannot legislate for the future is uncertain at best.
A pension is one of the best ways in which we can safeguard long term saving interests. This is because after retirement a pension provides a stream of steady income to the pensioner. This sum can also be paid to the pensioner’s widow/widower or in certain cases children in the event that the pensioner dies.
Most pensions are managed under a pension scheme. This is a long term pension savings plan in which the scheme receives contributions from employers and employees and invest these funds until such a time when employees leave the employer for any reason ie termination, resignation, redundancy , death, dismismal etc. The fund is overseen by trustees who see to it that all legal and regulatory obligations with regards the fund are met.
The pension fund manager will look for investment opportunities through which to grow the funds received, while the fund administrator will be responsible for the ensuring all the records and files are in place and the payments are made timeously.
A member can access their contributions after their retirement. However, should a member leave their place of employment they have the option of either seeking to transfer their contributions, inclusive of any applicable interest, to another scheme. They could further leave their contribution in the scheme and access them at retirement. Or they could opt to take their accrued benefits.
Thus, while the most widely held view is that a pension scheme is long term saving for retirement, it is also a safety net should one lose their current employment.