Ask anyone if they have taken a look at their Pension/Provident fund statement lately and the answer you will probably get is “NO”! And another likely answer “what is that, where do I obtain it”? I find that most people don’t even know if their employer provides a Pension or Provident fund, they just know that every month a certain percentage is going towards this compulsory retirement plan their employer has. For the millennial woman, I say this is irresponsible. You cannot leave your retirement neither to chance nor your employer. If you are going to be financially independent and build wealth you need not only invest in yourself, but also start planning for retirement ASAP! It is good practice to look at your statement not only when your employer provides it but make it a habit to look through your statement thoroughly at least twice a year with your Financial Planner so you know how it fits in with your overall wealth plan. Below are some of the key information to look out for when you receive your annual Pension fund statement or as and when you request it.
The first component is the actual savings towards retirement 1. How much you and your employer are contributing towards the Pension/Provident fund. – Out of lack of knowledge, most people opt for the default contribution percentage, not knowing that there is normally a higher percentage they can choose; E.g. you can choose to contribute anything from 7%-15% of your salary towards your retirement fund (depending on each employer) 2. Fund selection – This speaks to your risk tolerance, age, knowledge of investments etc.
Most companies have a second component of benefits in the Pension/Provident fund plan, which is the Group risk benefits. 1. Group life cover – this is the life cover provided by your company. It could be anything from 2X/3X/4X your pensionable salary. 2. Disability benefit – this can either be permanent disability, income protection or both, if your employer is nice enough!
My challenge to you is that as soon as you finish reading this article, contact your HR manager, and request your benefit statement. This time around study and scrutinise it; know how it speaks to your retirement plan. Make a plan of how your future is going to look like, educate yourself now and reap the rewards later.
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