The Old Mutual Financial Services Monitor is a study aimed at uncovering the financial behaviour, attitudes, and perceptions of working Ghanaians. Not only has it achieved this objective, but it has also provided valuable insights for Financial Services Providers (FSPs) to better serve their customers.
Today’s focus is on retirement savings and the attitude of the working Ghanaian towards it. The monitor reveals a high correlation between adult dependency and retirement savings. But first, let’s delve into what it reveals about retirement savings.
According to the Monitor, retirement savings ranks 8th among savings goals. This indicates that retirement savings is not a priority for the working class. Approximately 6 out of 10 working Ghanaians are not saving for retirement, with this figure even higher amongst informal sector workers.
What could be causing this?
Financial literacy is generally low in the country and the national discourse on retirement savings and planning is not enough. However, this presents an opportunity for FSPs to incorporate financial education into their strategies and product development to increase awareness.
A high number of those not saving implies a correspondingly high number of adults relying on their children for support in old age. According to the monitor, 7 out of 10 Ghanaians are counting on their children to support them in their old age, particularly those in the 50 to 57-year age group. Is this a national concern?
Absolutely. What about the children or young adults who need to plan and save for their futures? This also highlights the percentage of working Ghanaians experiencing financial stress, which stands at 64 per cent.
As a business committed to being the customer’s first choice to grow, sustain, and protect their prosperity, Old Mutual continuously educates and sensitizes customers through its flagship financial education program, On The Money, on optimizing their finances for financial freedom.
Another innovative initiative is the launch of the industry’s first Retirement Salary product also known as the Annuity product, which is designed to provide financial security to Old Mutual customers aged 50 and above.
As the name suggests, it guarantees a lifetime income for the plan holder securely, advancing self-reliance and enabling retirees to enjoy the perfect retirement. Interested individuals need only make a lump sum deposit and can expect monthly salaries for the rest of their lives. Today, all existing Old Mutual annuitants have had their 2023 monthly salary increased by 16% to help cushion retirees against the general rise in the cost of goods and services. Great offer, if you ask me.
What about those who are younger, like the 45-year-olds interested in the retirement salary product? For such individuals, Old Mutual offers the Deposit Administrative Scheme (DAS). DAS allows them to deposit and grow their funds until they are ready for retirement, at which point it is transferred to the Retirement Salary plan, providing monthly salaries. It’s that simple!
Retirement planning is a crucial aspect of the broader savings ecosystem. As FSPs, we must continually educate customers and the general public about the benefits of saving and planning for retirement, including reduced adult dependency, reduced borrowing, and less financial stress on the working population.
From an economic standpoint, retirement savings represent long-term investments essential for long-term projects and beneficial to the state. Moreover, reduced reliance on state support for the elderly frees up funds for other purposes. The responsibility now falls on all of us to ensure that we, along with those nearing retirement and future generations, save and plan for retirement, fostering a less stressed population and a better Ghana for all.
