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#BTColumn – Retirement awareness is critical

by Barbados Today Traffic
5 min read

Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

by Dennis DePeiza

A traditional definition of retirement, refers to it as “the time of life when one chooses to permanently leave the workforce behind.”

From a layman’s perspective, retirement is generally thought to be a process of time, which commences when the employee has reached the maximum age at which he can continue in the employment of a private sector enterprise or as a public sector employee.

While age is usually applied as the basis for retirement, the process of retirement can however commence where upon an employee is forced into early retirement by virtue of health reasons.

The mandatory age of retirement in the public and private sector often tends to be a matter of divide and controversy. It is known that the age of mandatory retirement can vary between ages 55 -67.

In bringing clarity to the age of retirement, research drawn from Wikipedia, pointed out that, ‘the retirement age is the age at which a person is expected or required to cease work and is usually the age at which they may be entitled to receive superannuation or other government benefits, like a state pension.’

It is important for workers to understand the difference between when you are eligible to retire, and the difference between minimum retirement age and normal retirement age.

It is said that retirement in a general sense is the time of life when you no longer need to work to live comfortably, and can rely on savings or passive forms of income to fund your lifestyle.

Whereas this sounds as music to the ears, it is buttressed by the point that an employee can choose to retire at any time. It is recommended that in contemplating such a decision, it is wise to consider if the individual has worked for the required number of years in order to be eligible for a pension and a gratuity; and more so in the case of the latter, where such is paid.

It would definitely be wise for an individual to also consider if they have reached the qualifying age which triggers the payment of Social Security or National Insurance benefits.

It is important to know the age at which you can retire and collect Social Security/National Insurance benefits. It is to be made clear that the age at which you should retire and that at which benefits are to be paid, aren’t necessarily the same.

There should be an awareness of the Social Security/National Insurance benefits to which a retired employee is entitled. The understanding is that these may differ from country to country.

Basically, social security benefits provide replacement income for qualified retirees and their families. These include retirement, disability, survivors and supplemental benefits. For example, a retiree is to receive a monthly cheque, which is computed based on the worker’s age and the amount of money the individual has earned over their work history.

The calculation of payment is made on the salary paid at the time of the exiting of the employee from the system.

Early retirement is an option which some workers contemplated. This is understandable in that, “By the time some workers reach their 50s and early 60s, they’re starting to feel burned out, so retiring before the traditional age of 65 can feel invigorating.

Men retire at an average age of 64.6 years, while for women, the average retirement age is 62.3 years.” (Investopedia: Daniel Kurt: January, 04, 2022)

For persons contemplating early retirement, there are to be mindful of the drawbacks in doing so.  For example, claiming benefits before full retirement age will lower your monthly payments. In order to get your full retirement benefit, it would be best to wait out the full retirement age before retiring.

It is obligatory that employers pay the legally required contributions into the Social Security/ National Insurance fund on a monthly basis. They failure to do so is by all intents and purposes a criminal act, as it denies workers their entitlements, bearing in mind that Social Security provides the retired employee with a source of income.

The actions of those employers who fail to comply is most reprehensible, considering that the impact this has on those who suffer a disability and are forced out of work. It is to be taken on board, that the social security benefits are used to support your legal dependents, such as the spouse, children, or parents, who lost a family member during the course of duty or as a result of an injury sustained on the job.

Employees are urged to press their employer to provide a pension plan when such is nonexistence in the organisation.

A pension plan is a type of retirement plan that provides monthly income for the employee after retirement from the job. As an employee, you may contribute part of your wages to the plan.

Generally, the plan requires that the employer contributes to a pool of funds invested on the employee’s benefit.

Basically, this is what is known as a Contributory Pension Plan. This is a type of pension plan where the amount you get on retirement, depends on how much you put in and how much this money grows, based on the employee’s and employer’s contribution.

Dennis DePeiza is a labour & employee relations consultant, Regional Management Services Inc. www.regionalmanagementservices.com

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