Insurance company as pension scheme


SAVE at least 10 percent of your income on a monthly basis, always plan ahead and be proactive.

He that plans the future works less in the future. Live a debt-free life if you can. What you cannot pay cash for is not your size. One of the richest people on the face of the world, Warren Buffet, once said: “Do not save what is left after spending, but spend what is left after saving.”
Buffet further said that “Someone’s sitting in the shade today because someone planted a tree a long time ago.” It’s true. Planting and nurturing the seeds of financial success now will lead to a ‘shade’ that one will enjoy later in life, like freedom from debts, a secure retirement, or the ability to cover college costs for your children.
Such a long-term view of money is central to Buffett’s investing decisions. In his 2014 letter to shareholders, he said people should “invest with a multi-decade horizon. Their focus should remain fixed on attaining significant gains in purchasing power over their investing lifetime”, rather than on moments of stock market volatility or economic crises.
Building true wealth and financial security takes time, and you will likely encounter financial challenges along the way. Sometimes they are avoidable; sometimes they are not. But viewing your finances and a lifelong endeavour can help you stay on course despite those hardships and give you a financial foundation that will last.
Zambians should not be myopic when it comes to saving for the future and preparing to retire healthy and rich. This ideology of fikaisova kuntanshi is alarming, meaning ‘enjoy now and things will sort themselves out’ is not helping us. In order to avoid stranded millionaires (retirees) to be destitute and wanting to bounce back into full- time employment even after 60 years of working, we need to plan ahead. One wonders if the current graduates will ever be absorbed into the labour market considering that the baby boomers are still clinging onto jobs. One of the key solutions to this challenge is for those that are now earning incomes in whatever way to start planning for the future.
Last week we looked at Mukuyu Growth Investment Fund (Mukuyu), a mutual fund designed by Aon Zambia Pension Fund Administrators Limited (Aon Zambia) as one of the engines for investment. The Mukuyu Growth Investment Fund has the following benefits:
1) Flexibility
It is a fund that can be used by an individual to invest for retirement if a person works in an organisation where there is no pension scheme or a retirement plan.
2) Create your financial security
Traditional systems of the employer helping you with a loan when you want to buy an item or asset that requires a lot of money have been broken in today’s society. You can therefore save in the Mukuyu to enable you to buy an asset such as a car or pay for education, etc.
3) Gives you peace of mind
If you lose your job, your savings in the Mukuyu can be an invaluable nest egg which would give you comfort that you are not worth nothing after all.
4) You save consistently
Group mutual funds are one of the best ways to save. Registered mutual funds such as the Mukuyu, enable you to save consistent amounts over a period of time, which you cannot do on your own.
5) Affordable fees
Preferred and affordable management fees.
6) Start saving now
The Mukuyu offers you an opportunity to start saving now. The sooner you start saving and the more often you save, the better. Time works to your advantage. You should, of course, set goals and save as much as you can, but starting as soon as possible is the key. Saving through payroll deductions is an easy, painless way to save conveniently and quickly.
7) Strength in numbers
Interest rates and management fees are based on the combined purchasing power of group plans. You enjoy competitive rates that are always better than when you are on your own. These benefits are passed directly to you and can have an impressive impact on your savings.
8) Access at any time
All investors have 24-hour access to their account under the fund through a secure Web service. After you become an investor, you receive a letter outlining how to use the Web services, and a password will also be given to you, enabling one to check the value of investment at any time.
9) Your beneficiaries
You can name a beneficiary to receive your savings under the fund in the case of any unexpected eventualities. This provides for the assets to be passed directly to beneficiaries, thus bypassing the drafting of a Will and fees that might otherwise apply in drafting a Will.
10) Collateral
You can use your funds under the Mukuyu as security to obtain a loan from a bank.
Other advantages of investing in the Mukuyu
1) Professional money management
Professional advisors have the skills, tools and time to manage the fund on a day-to-day basis, perform research and make decisions about which investments to buy, hold or sell.
2) Record-keeping and reporting
Records of your interest are kept and you are sent financial statements, tax slips and receipts when required by applicable law.
3) Liquidity
Units may be redeemed at any time depending on the amount held.
4) Diversification
Investment values are always changing. Owning several investments can improve long-term results as the ones that increase in value can compensate for those that do not.
5) Professionally managed
The Mukuyu is a segregated fund managed by Aon Zambia with an independent Trustee and Auditor. Aon Zambia handles all the management and administration duties, respective investment managers perform the investment function for the respective unit trusts, while AMG Global Trust Limited handles the trusteeship of the fund.
All the parties handle their respective duties professionally thereby relieving the investors of any legal and financial duties associated with management, administration and trusteeship of fund management.
The author is a human resources practitioner and pension advisor.

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