ONE afternoon I took a drive to visit a white farmer within the Copperbelt with a success story in farming.
He has been staying in Zambia for several years making thousands of dollars from simple yet profitable farming activities ranging from bee keeping, livestock and crop farming.
His farming model or concept is about filling the gap between a ‘struggling’ peasant or small scale farmer and the ‘expensive’ (high financial muscle) commercial farmer.
As we were chatting one thing struck me. He told me that whatever money he was making on his farm was meant for his charitable projects aimed at supporting vulnerable children by taking them to school and providing some good health facilities, an undertaking he described as his life purpose.
He explained that his farm had potential to make about US$50 million annually and even after making such money the profit would go towards charitable work.
‘What’, I exclaimed at this jaw-dropping conundrum.
One might wonder whether this was just bravado or the man was just kidding.
Believe it or not he was serious.
My huge question was on how he survived if he was not depending on the income generated from his farm.
I mean this is a man who really works hard at a farm and is fully involved. He told me whatever he did was out of the love of it.
The real panacea was that he was living on pension funds which were guaranteed for the rest of his life; I was amused at this reality.
One can only imagine how life would be better if majority of the retirees earn a decent pay out from their pension funds.
From this practical story I thought of sharing the importance of pension schemes as a way of guaranteeing some revenue after retirement.
The appreciation and implementation of this subject at an ‘early’ age cannot be overemphasized.
One can actually determine how their future will be through mechanisms like pension scheme contributions.
Most of the people in employment today are respected because of their money and ‘influence’ they exert.
The question is whether they will retain that respect after leaving employment.
There is less honour in poverty for example in Ecclesiastes 9:16 the bible says ‘Wisdom is better than strength; nevertheless the poor bvbman’s wisdom is despised and his words are not heard.’
It is not fair to have a flourishing working life but then spend the retirement life struggling. I agree to the axiom that money at some point needs to work for you.
I am cognizant of the fact that most jobs especially in the private sector are on contract basis but under this discussion I will illuminate how one can join a pension scheme even if they are on contract basis.
So what is a pension?
According to Investopedia a Pension plan is a ‘type of retirement usually tax exempt wherein an employer makes contributions toward a pool of funds set aside for employees’ future benefit.
The pool of fund is then invested on employee’s behalf allowing them to receive benefits upon retirement’.
Given the longevity of the period that the funds are available at the pension manager’s disposal, these funds have huge investment opportunities.
You can imagine a pensionable employee who starts contributing at 20 years; he or she will have about 35 years before he accesses his money.
The availability of such funds can stimulate economic growth as one of the key sources of financing thereby spurring development.
We can make reference to the many projects in Zambia that have been financed from such funds especially buildings.
In most developed economies these funds are a significant source of capital funding.
However these funds can also be abused by those in charge.
Readers and most importantly pension scheme members can take comfort in the various statutes available aimed at ensuring the funds are used for intended purposes; we will be discussing some of them on this platform.
My job today was to stimulate interest in the subject on pension. Next week I will endeavour to extricate intricacies of the subject.
Comments: webster@picz.co.zm or webster_tj@hotmail.com or on face book search for Insurance Talk-Zambia page or call/text 0977 857 055
[The Author is a Chartered Insurer with more than ten years industry experience]