Build your own retirement safety net

March 23, 2021

Sagicor  is  advising  working Trinidad  and  Tobago  nationals to  set up personal pension arrangements if they wish to maintain their current standard of living during their retirement years.

According to James Camacho, Vice President, Operations, with Sagicor Life Inc, there are several reasons  why  an  individual  should  set  up  their  own pension in  preparation  for  retirement. However, the  most  compelling  of  these  is  the  fact  that  the  National  Insurance System(NIS)provides  only  a  percentage  of  your  current  income  during  retirement  and,  as  currently structured, is already under pressure to deliver these benefits beyond a certain timeframe.

“Life expectancy for citizens continues to rise, while the demographic profile of the population is trending towards older ages. This means that the ratio of individuals contributing to NIS versus those receiving retirement benefits is shifting towards the latter,” he stated. “The result is that as time goes by, more money will be paid from the Fund than injected into it.”

Regardless  of  their  current  stage  in  life,  every  individual  should  therefore  look  seriously  at starting their own pension arrangements to guarantee that there would be money there for them to not only survive, but also enjoy their retirement.

Additionally,  he  made  the  point  that a  monthly NIS Retirement  Benefit can  only  be  accessed when employees  have paid  a  minimum  of  750  contributions  to  their  account through  the remittances  of  their employers.  Citizens  who have not met  the  minimum  contributions  will receive a retirement grant, which is a one-time lumpsum payment.

“For most individuals, their  expenses  would  typically  be  less  by retirement,  assuming  that mortgages and other loans have been cleared off. When this is combined with other savings or pension benefits from their previous employers, they should be in a relatively good position,” he explained. “The  challenge also  applies  to those individuals  earning  higher  salaries prior  to retirement, as the  individual  would  need a larger amount in  order  to  maintain  the  minimum recommended level of income during retirement, which is 65-80per cent of their pre-retirement income.”
Camacho said every Trinidad and Tobago citizen, regardless of their salary level, should try their utmost to put aside something for their retirement from as early as they can, given that the NIS benefit would, at best, only provide a portion of the income they had become accustomed to