PENSION INCOME: How Secured is Your Old Age?


I find it disheartening whenever I read an article about an aged person, especially Ghanaian “celebrities” openly begging for financial support to take care of their basic needs such as accommodation, food, and medical bills. 

Such publications, with the recent being that of Ghanaian actor Psalm Adjeteyfio, popularly known as TT, lead me to ask this: what about the many other aged folks within our communities who are not celebrities or do not have access to the media—via which they can beg the general public to come to their aid?

Importantly, these incidents remind me of the need to plan for my own old age. And one of the major ways to prepare for when you are old, frail, and unable to work generate employment income is, through pensions.

It’s reckless, perhaps even stupid, to have no plan for when you are old or sick considering the capricious nature of life.


What is a Pension?

A pension is a fund into which a sum of money is added during a person’s employment years and once the person retires, periodic payments are drawn from this fund to support the person’s retirement.

Types of Pensions

There are mainly two types of pensions, being, State Pensions and Private Pension Schemes.

State Pensions

State Pensions are operated by the State based on some sort of contributions from individuals during their working years. The manner this scheme is ran, regulated and paid out may differ from country to country.

In the UK for instance, individuals are eligible to receive a full state pension if they have paid National Insurance contributions (for 35 years) during their working life.

To be able to claim the state pension, you must be at the state pension age (“SPA”). Currently, the SPA in the UK is 66 for men and for women. It is estimated that, the SPA for both men and women will be 67 by March 2028, and by 2046 it will be 68.

The maximum state pension an individual can receive for 2020/21 is £175.20 per week.

Therefore, if a person has paid at least 35years of National Insurance contributions, then that person can receive this full payment per each week until death.

If an individual has not paid National Insurance contributions for the full 35 years, the individual will not receive the full State pension. If a person during his or her working years paid less than 10 years National Insurance contributions, he/she is unlikely to receive any State pension at all.

Private Pension Schemes

While State pensions are popular especially in third world countries, Private Pensions are regularly becoming popular too, among young professionals—as this scheme allows individuals to contribute as much as they can to their retirement pot to significantly increase how much they will receive on retirement.

In fact, many people use Private Pensions to supplement State Pension incomes to enable them to have a high cushion of income during retirement. 

Personally, I love the idea of Private Pensions and I currently pay into two different Private Schemes in the UK, alongside my State Pension contributions via the National Insurance scheme.

When it comes to Private Pensions, you can control how much you will receive on pension since you can increase and decrease your contributions to the pot.

At What Age Should You Start Contributing to A Pension Scheme?

The longer you pay into a pension fund or pot, the larger your pot is going to be—therefore, the reasonable thing for any person to do is to start paying into a pension as soon as they start earning some money.

For private pensions, you can start with small contributions and scale this up—depending on your available income.

While it is important to have money today, it is more important to have money in the future when your earning power almost or completely diminishes as a result of old age.

What If Pensions Do Not Work in Your Country? 

While researching for this article, many people from Africa (Ghana and Nigeria) told me about the appalling state of the pension regimes in their countries. I came across an investigative documentary (below) by the BBC which highlights the shocking problems pensioners face in Nigeria—including having to pay huge bribes before their pension is paid to them or having their pension payments stopped abruptly and arbitrary.

In such African countries, pensions are unattractive or are not worth it. Paying monies into a pot that you will never be able to access or wouldn’t be worth anything at the end of your working life is not worthy of the contribution.

If you find yourself working and living in a country that pensions can literally be described as a “scam,” you still cannot fail to plan for your future—such that you would end up begging the public or at the mercy of your children and others for a decent living when you become old.

There are other ways to generate decent levels of income while not working or when you retire and for many pensioners, regular rent/property incomes are used to replace pension payments in such countries.

So, instead of contributing to a pension scheme that is useless, you can ensure that you have a few or apartment units or properties that will generate you a yearly or monthly income—which you can depend on when you are old and not working.

Of course, it may take a lot to erect such properties, but it is doable. I know several aged persons who have rented out rooms in their own houses to others, to generate income, on which they depend.

Even if you intend to depend on pension schemes to cater for when you have retired, it is always good to bump this up with other sources of regular income such as returns from properties or other investments. This is because pension payments alone may not be enough in countries where you must foot all manner of bills including medical bills. You can also consider all means of investments (such as shares in reputable companies) to rely on their returns or dividends when you are old.

It was recently reported that about 53% of pensioners in Ghana receive less than 1,000 GHS a month and out of this number, over 1,600 of them receive less than 300 GHS a month. If you are a pensioner who must, for instance, spend about 500 GHS a month on medical bills, such a pension amount wouldn’t be enough for you.

While we worry about today and we ought to ensure we are living our best lives today, we should not fail to make adequate provisions for when we are most vulnerable—old, weak, and probably sick.

That is why planning for retirement is not negotiable.

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Chris-Vincent Agyapong Febiri, Esq
I am a Hedonist, Contrarian, Traveller, Lawyer, Atheist, Thinker, Writer, Minimalist & a Professional Truth Sayer.


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