Business

Early retirement planning key—firm

Sycamore Consult Limited has urged employees to plan ahead and make informed decisions about their lifestyles in retirement.

The firm’s managing director Audrey Mwala said this in a telephone interview on Thursday on the sidelines of a retirement planning workshop with some clients in Mangochi.

Mwala engages clients on retirement in Mangochi. | Sycamore Consult Limited

She said when people retire, they get a lump sum which only keeps them going for a few months after which they have to rely solely on annuities.

Mwala said: “The moment that money is finished, they have to rely solely on the annuities which they get on a monthly basis from the remaining 50 percent which they used to buy their annuity, or they are using it on a programme withdrawal basis.

“Now, the point is that the money which they get is very small compared to what they used to get and it becomes almost impossible to maintain the same lifestyle.”

She said on average, some people get 15 percent or 20 percent of what they used to get as a salary which is not enough to afford their lifestyle.

“People should appreciate that their employers have done their part to give them the retirement pension money. But then there is need for them to also do their part. And that is done through knowledge, because a lot of people are in the state where they are because they don’t know,” said Mwala.

She said the workshop equiped participants to start making investment decisions where they put aside money that will create additional income to bridge that gap.

“There’s the phase where people are working and they have to invest and now grow money that they can get when they retire and the second phase is when you are retiring the money that you get, how do you manage it?” said Mwala.

In a separate interview, Blantyre-based employee Violet Sichali said with no knowledge about retirement planning, it is difficult to make investment decisions that would benefit one in old age.

Under the new Pensions Act, retirement age was maintained between 50 and 70 years. Minimum contributions were also maintained at 10 percent for the employer and five percent for the employee.

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