Pension fund.jpg

Thank you for sticking by, always a pleasure to hear from you. In this spring series, we have covered the following topics so far , ( click on each topic if you have not yet read the article or just want to re-visit it). My hope is  always that you will become better at managing your money and be a step closer to achieving financial freedom. These topics are:

  1. How do excess payments really work and what are some of the clauses that could be included in your contracts that you are not aware of.
  2. We looked at how to evaluate your net worth and how that can help you when choosing what to focus on in your financial management.
  3. We also looked at how you can evaluate investment choices by looking at the opportunity cost .
  4. And ended off with how the matching principle work especially when you are looking to obtain funding

Today, I was shocked and disturbed by my provident fund statement that I received for the year. To date, for the 2018 calendar year, I was charged N$4 100 in admin fee and only received N$882 in interest. At face value, my pension is actually loosing money both in theory and real terms. Because the returns is less than the fees I am charged by the pension company, I am actually loosing money as well the fact that inflation is decreasing the purchasing power of money. All else remaining the same, I can expect to receive less than I have contributed upon retirement.

If I had this knowledge at the time I had to opt for this provident fund, I would have probably not opted for it. This is because knowing that would have changed my decision. At the current growth rate, my money is actually better off in a bank account as the interest net of bank charges would have been better. In addition, at least I am guarantee that my capital is also safe when I invest at the bank.

This is why when I discovered the fund fact sheet, it opened up my eyes to a lot of thing. We have covered the fund fact sheet earlier (read it here) , which is one of the key tools that you should be asking for before you have sign up for products you hardly understand.

In this week articles, I will explore some of the principles around common terms in fund fact sheets and those which you should be looking out for in particular. I would also want to cover how life cover and study policies work. If time allows, I will also explore whether it’s worth it to take out funeral covers.

Wishing you a great week ahead and looking forward to interacting with you.



8 thoughts on “Is pension really worth it?

  1. Hi, after reading this article, you have just reminded of a question I always had.
    At the age of 28, If I have to change jobs today, is it advisable to transfer my pension to the new job pension fund or claim it and invest it into certain long term investment fund with a better interest? Or maybe use it to pay off my bond. 🤔
    Please advise


    1. Hi dear, I will write a whole article on your question, but to better advise you on this, I will need to know a few facts and circumstances. Please send me an email on then we can take it from there. But great question


  2. That’s why I cancelled mine at EY, the payout when I suspended my article was close to nothing even on capital and on top of that it was taxed 🤦🏽‍♀️.

    Took up one cause my employer contributes more 💥


    1. But it’s funny how people think about this. Most Employers offers pension funds and match employee’s contributions. You can just imagine how often we think we are scoring when in actual fact we are loosing


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