Pension Fund Withdrawal Should Be ‘Last Resort’

May 9, 2016

mjcWithdrawing money from a pension fund should be a last resort and could affect final pay-outs stopping people living out their golden years in comfort, according to a leading pensions company.

Marie-Jo Caesar, Chief Operating Officer for Pensions at Colonial Group International, was speaking after it emerged that $17m has been withdrawn from occupational pensions.

“I understand that these withdrawals were due to financial hardships and probably would not have happened otherwise, but it is so important to understand that people may not reach their retirement goals as a result,” said Ms Caesar.

“It can cause you not to be able to retire when you had planned or cause you not to be able to afford to live out your golden years as comfortably as you had envisioned.

“We understand this option has been a ‘lifesaver’ for some. But it should be used as an absolute last resort. It is important to try and consider every option before reverting to taking money out of a pension.”

Ms Caesar said it was important to try and build up an emergency fund to use as a ‘rainy day’ account. “You want to hold your emergency funds in an account that is low risk and easily accessible.

“The most important consideration is accessibility, so don’t worry too much about the interest you are receiving for now.

“Investing for retirement is a long-term plan and therefore getting yourself into good money management habits, through proper budgeting and saving, will put you in a much better position to be able to handle unforeseen emergencies without having to sacrifice your retirement plans.”

Legislation allows people to withdraw pension funds for hardship reasons such as educational fees, rent arrears, medical bills and mortgage arrears.

Ms Caesar said people were now living longer and one of the top risks retirees are faced with was longevity risk.

“Outliving your money is a real risk and withdrawing money in the short term can derail you off your long term path to achieving the retirement you want.”

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Comments (10)

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  1. Jus' Askin' says:

    “It’s My Money, And I Want It Now!” ;-)

    Pensions should end, People should control their own money!!!!

    • frank says:

      Pension money is the money. That. You and your employer have put away to benefit you so it is your
      Money.
      The major insurance firms like Argus. Colonial and bf&m were granted. As pension administrators
      They control your money now and also when you retire.
      During this time they make a lot of. Money off your hard earned money and they give you a monthly
      Allowance and laugh all the way to the bank.
      Pension money upon retirement should all in one lump some be given to the employee
      And stop letting these things make money off your money

      • Ladeej says:

        You do realize that there is a Pension Act which does not allow you to take your money in a lump sum. You should speak to your MP if you want the law to change.

  2. Real Deal says:

    If I could use some of my 54k private pension I invest in myself and start my own business, this would put me back on the right track instated of being unemployed searching for any little opportunity I could find. instead they want me to grow old and not even get half of it before I die.

    • My Destiny says:

      I agree. I have over 50k in a pension account and was told that when I do turn 65 they would only give me $200 at the most per month. Really, they expect me to retire on that. I would rather have my money and start a home business that will benefit me in the long term.

  3. frank says:

    pension money is money that you and your employer have saved for you so it is your money.
    the insurance firms like argus colonial and bf&m some how were granted the right to be administrators of your money
    while your money is with them they make lots of money of your money
    this becomes part of their annual profits that how they can post great
    income at the end of the year and smile.
    pension funds at retirement should be given to the employee in one lump some thus cutting out the greedy insurance companies
    it is your money and you could use it now

  4. Blazer says:

    I want all my money NOW.
    I could should use it NOW

  5. Takbir Karriem Sharrieff says:

    People no longer look forward to living longer.They want their money now.They want to enjoy life ,while there is some life left in them.Life is getting increasingly harder.Its their decision to make.

  6. talynbda says:

    The reality is professional, educated and experienced (!!!) Bermudians are losing jobs left and right. Months and years (for some) have passed and still no permanent job can be secured.

    We live in a country where there is no real social safety net. Basic living expenses have been tightened, and squeezed some more, to reduce our monthly budget. For some this means going without medical insurance as it is too expensive to accommodate a basic budget. Or instead we’ve switched to the cheapest coverage with HIP, which still has no respect for a tight budget, especially if more than one family member needs coverage (and in my opinion every family member should have some coverage, though sadly this is not the case in my own family). When we talk about human right, access to medial care should be a basic given right, like in so many other countries, but I’ll digress there.

    Given all of one’s basic expenses, while cutting back as far as one can, the severance packages and the 6-8 month emergency savings (for those professionals fortunate enough to have either) are being depleted causing fear and panic for even those capable of making a dollar stretch.

    So what do you expect? No one wants to have to touch their pensions. It’s sad that such a huge amount has been withdrawn given the size of this country, but what’s sadder is that Bermudians feel they have no better options. For some, moving away is not possible. And if it were it is not what they want. Not everyone has the ability, personality, skill set, or money to professionally reinvent themselves the way I hear so many employed Bermudians telling us unemployed to do. What’s worse, is that there are many who do attempt this metamorphosis, only to be unemployed STILL after getting another degree or upgrading skills to meet what they have been told is necessary to compete in this job market.

  7. John says:

    The pension concept of amortizing payments out of your pension to you over your life expectancy is a safety net that insures the pension holder has a steady flow of funds on a monthly basis. A pension is one aspect of your retirement income, in essence when planning over a lifetime for retirement you would typically have accumulated other assets in that plan over various account types. Theoretically if you have done so why would you want to eliminate the annuity payments and if you have not shown any discipline in accumulating any other assets in the form of a safety net what makes you believe you can manage your pension assets better than a professional.