I actually cannot believe that I wrote this article in 2008- I believe every single work force should read this article. It x-rays the American 401K style of pension that was adopted in 2004 by the Obasanjo government. Since I don’t depend on this system, I may not be too bothered about it but if you work for a company or the other, you need to be extremely concerned – read one of my 2008 oldies:
My friend’s mother’s burial at Isele Azagba, Delta State, last week forced me one more time to look at the reason I am on this earth. I am very happy I crossed 7 seas and 7 mountains to support my friend in this very low point of his life but what really hit me was the heavy reflection that came with sorrow and pain. Sorrow and pain gives wisdom to the simple and re-enforces one to follow his true calling. King Solomon of the Bible could not have hit the nail on the head more when he said it is better you spend time at funerals than at festivals. For you are going to die, and it is a good thing to think about it while there is still time (Ecclesiastes 7:2, the Living Bible).
Thinking of death makes me think of life and what we are eventually making of this gift called life. For an average individual that spends time on earth, the following sequences are the normal trend; give birth, go to KG, enter nursery school, get to primary school, join secondary school, scale through university, enlist in the NYSC, get a job, get married, give birth, enter retirement stage and await death. You can see that a normal life offers nothing spectacular and most people rejoice when they jump from one stage to another. It is a social trend and everyone that deviates from this trend is seen as abnormal or above/below average. It is not these sequences that bother me but how we go through these sequences and the value we place on each sequence. It is the little knowledge we have about how each sequence is vital to the next and what we are expected to do with each of them that really inspired this write-up.
One man I respect so much is Donald Trump, a real estate mogul in the USA and also a bestselling author; he said something I inculcate in every aspect of my life “I try to learn from the past, but I plan for the future by focusing exclusively on my present.” It is what we do presently that shapes our future. If you labor 12 hours a day to eventually become financially free, you may be far from the point because financial freedom has nothing to do with length of time you put in working but the value you proffer during your working days that colors your future. Out of the sequence mentioned above, it is the getting a job part that gets me really worried. It is not the getting a job but the attitudes placed on getting the job; most people get a job fulfill many needs but the crucial reason people work is to be financially empowered. They study for 16+ years in formal institutions to work for an average of 35 years doing what they do not have passion for in order to be financially empowered. This is almost 70% of their life making money for groups of individuals who employed them.
Now we are socially conditioned to work for money and we have no clue that we can make money work for us. To be financially free, you must make money work for you so you can face your passion. Let’s understand from the bible the difference between God’s kind of labor, man’s kind of labor and rest:
The book of Genesis Chapter 1 describes to us the way God labors when God wanted to create things. God created the world in 6 days and God rested on the 7th day (this is figurative describing the day when everything he created was perfect). Let’s analyze the labor of God; the labor involved creation by speaking words and observing it was good. So on the 7th day God ceased from his works but the funny part was that there was still no man on the earth to till the ground. God had created man but there was no man on the earth so he took the dust of the earth and breathed life into man. This simply means God had created man in the mental realm but had not physically appeared on earth; all the labor that God did for 6 days were not physical but mental. God resting does not mean God was not doing something because after he ceased from his work, he molded man from the dust of the earth and created woman from man.
This is the way God sees labor; creating what you want on the inside of you and then you are sure it is perfect. It is the mental creation that is labor not the physical creation. The mental creation of man was the image of God not the physical body. We are God exemplified on the inside of us not the physical part of us. This is why God cursed man that he would labor from outside sweating so whenever you are laboring from the outside to fulfill your dreams, you are going in the “curse” route. Whenever, you deny what is on the inside of you to please the outer body, you are going to do it with a lot of sweat. This is why a lot of people stay in the traffic for 2 hours sweating to get to work and stay in the same traffic for 2 hours going back home; they are not fulfilling what is inside of them but living the dreams of another man by exchanging their time for money. Now that you are socially conditioned to exchange your time for money, don’t you think is about time to re-examine your life?
Now, I have made you see the way God sees work through God’s action of creating the earth. God labored for a while and rested; the resting itself is a kind of work itself but since the real labor has been created in the mental realm, whatever work you do after that is called resting. This is not what happens when people work 35 years of their life and they retire; when they retire, they are not resting at all but in a different kind of labor worrying about their pension. Rest is called passionate work; work that you are emotionally passionate about is not regarded as labor because you can forgo sleep, food, etc for it and not be bothered. Not many people are experiencing this kind of work because they labor from the outside-in approach instead of the inside-out like God did.
When people asked me why I gave up my job? I smile without giving them a concrete reason. Every reason I gave every single person including my dear parents leads to one single reason; I can never retire at age of 40 on my job even if I was given double promotion every single year till that age which is not feasible. I gave up my job to retire far earlier than my job would allow me to. Retirement to me means resting which is giving 100% of my time doing what is inside of me or put in a succinct way what I am passionate about doing. For me to get this done, I must implement leverage investment to make me financial free and fully concentrate on my passion. I have a better chance at hitting my target without the hustle and bustle of a job (this is me; Dipo Tepede not for everyone) but what I want to discuss is a general issue which is the heavy reliance on the Reformed Pension Scheme which is suppose to cater for your financial needs during retirement. Remember God’s way of seeing rest is not lazing around doing nothing because that’s an early route to the grave.
Now that retirement has been described, let’s face pension and holes that average Nigerian Workers do not see when they are happy with the new pension scheme. The New Pension Scheme known as the Pension Reform Act 2004 (PRA™ 2004) was suppose to be an improvement of the old Pension Scheme where Employers are responsible to paying a worker that retires a fraction of his salary every month till the worker dies. Since the responsibility is on the employer, the old pension scheme is most of the time based on erratic budgetary allocation; the funds provided were inadequate and were not delivered to the benefactors on a timely manner. This act breeds hopelessness and insecurity amongst retirees and thus the Pension Reform Act 2004 was enacted. To know more about the PRA™ 2004, please click HERE.
The following reasons below should be noted by Nigerian Work Force concerning the PRA™ 2004.
1. Pension is Risky
The PRA™ 2004 is entirely indexed on mutual funds which is a spectrum of various investment portfolio. This simply means that all your retirement savings is in various risky investment vehicles. To show you how risky it is, let us assume you work for 25 years and about to retire. Your Pension Funds Administrator (PFA) placed some of their investments in stocks and since stocks is entirely based on market momentum and capital gain; if it depreciates till the point of “crash”. If all that you have worked for is about to collapse, I doubt you would be able to retire that particular year. This simply means the New Pension Plan should not be your plan A for retirement and depending on it is highway to death.
2. Pension is Limiting
The PRA™ 2004 limits your financial muscles to a “savers” mentality and provides no room to expand. It gives you a false reality where you believe you are in a prison to collect periodic monthly payment from your PFA. There is no room for lump sum which is needed to start a business of your own supposing you want to venture out after retirement. The real annoying thing about the PRA™ 2004 is that you cannot use it to guarantee any facility from the bank. What an annoying stance?
3. Pension is an Hindrance
In any investment or business, cash flow is king but the way PRA™ 2004 functions is that you can’t even collect your money until you are 50 years or you retire from a job. Then you still cannot collect your money but placed on annuity. It has therefore hindered you from financial freedom by making you depend on the system till your money finishes. This is definitely not the best way to end your life on earth – constant dependence; you depended on your family when you were young, you depended on your job and now you are depending on your PFA to pay you monthly (remember, your money is still subject to market forces of the investment vehicle)
4. Pension is a Slow Plan
Any investment plan that does not employ leverage is going to be a slow plan. The guy that understands the power of leverage may take a whooping 15 to 20 years difference to retire before the guys that depends on pension. Can you imagine the vast difference; this is definitely a huge reason for you to learn how to leverage on your investment. Since leverage is risky and PRA™ 2004 is risky, it is better you learn the skills involved in leverage investment. Most leverage investment rely and returns cash flow which is vital to increase geometrically unlike the PRA™ 2004 that depends on capital gain.
5.Pension is a killer
Have you ever wondered why retirees are sick-prone with various diseases? This is not because they are old; this is because pension tames retirees to stop working and depend on hand outs from their organization (PFA). When a human being has nothing to do, he is prone to sickness but a human being that thrives on his passionate work hardly gets sick. This is why people should learn not to rely on pension but be active leverage investors so they can be financially free.
6.Pension is designed to favor the PFA
Who gets more out of this new pension act; is it the contributors (employers and employee) or is it the PFA that manages the funds? It is the PFA that gets richer from such funds. Neither the employer nor the employee have control over the investment thus are left in limbo of the exact returns generated from the mutual funds. The time value of funds is also in question where annuities are employed instead of giving lump sums of contribution to investor. The act is done in a way that the money continues hanging with the PFA making it easy to constantly turn over the money. When you make a voluntary contribution, it would be taxed by the government until after 5 years hindering the retiree from collecting the money. This favors the PFA and not the employee thus a re-think is needed on relying on this new pension scheme.
7.Pension is Government revenue
Please kindly note that your Retirement Savings Account (RSA) is not tax free. Every return you make is taxed and if you collect your money before scheduled time it is definitely taxed. Can you imagine being taxed twice by the Government? Your Salary is taxed then the remaining emolument is also taxed in the name of PFA™ 2004. The Government which is the wealthiest organization keeps on increasing in wealth by enacting some laws. This is definitely a structure to continue placing you in the rat race and it is only the unwise that would continue relying on such scheme.
