Location on Blog – Contributions
A penny more a day secures your future Author is Irene Moinkett
Employment has over the years provided employees with safe retirement and better terms after working years. However, this has not been the case for most of the pensioners. Pension schemes over the years have continuously improved, offering retirees better deals.
For instance, there are opportunities for pension top-up as well as post-retirement medical schemes. An employee could consider enhancing their contribution if they started saving late, if the projected benefits are likely to be insufficient at retirement or they have less than maximum in the current scheme.
GDC, the scheme has been domesticated and enhanced to encourage additional savings as well provide medical expenses upon retirement. Some of the ways through which one can enhance contributions to the Pension Scheme include, Additional Voluntary Contribution (AVCs) where one contributes on top of the normal contributions to an occupational pension scheme.
Additional Voluntary Contributions has advantages such as benefits enhancement and flexibility as one can increase or reduce contributions as circumstances change. One can also suspend the payments at any time or take a payment break and restart later as long as they remain active contributors to the pension.
Tax Relief
Besides, such contribution to pension entitles one to tax relief. This way, it helps to boost ones savings. Further, to spruce up your retirement, the GDC Staff Retirement Pension Scheme has a component of Post -Retirement Medical Scheme (PRMS). This is a voluntary contribution towards access of a medical cover at retirement. PRMF is entrenched within a registered retirement benefits scheme or by an employer.
Contributions are made while a member is in active employment. Medical cover benefits are met after a member has retired. These benefits are invested by the fund manager alongside the pension investment but reported separately as a medical benefit. The invention of this product is mainly to enable retirees’ access medical insurance, which is relatively costly or difficult to access at retirement since medical insurance covers for elderly are generally expensive.
The invention of this product is mainly to enable retirees’ access medical insurance, which is relatively costly or difficult to access at retirement since medical insurance covers for elderly are generally expensive. For instance, if you change jobs and get tempted to withdraw; you end up losing the principle, interest and tax benefits. It is highly recommended that you let the savings roll over directly into the new employer’s retirement plan or individual pension.
As you save for retirement, understand your retirement needs because retirement can be very expensive; it is estimated that one will need about 70% of the pre-retirement income (for the low income earners it is 90% or more) to be able to maintain the standard of living upon retirement. Finally, it is important to ensure that all records, for the dependents (beneficiaries) are well maintained by the custodian(s) of your pension/or any other savings/benefits scheme more so when you move from one job to another, or from employment to self-employment.
Importantly, it is prudent to let your savings at the scheme mature with time. Oftentimes, premature withdrawals have led to misuse of funds and misery.
