The National Social Security Fund (NSSF) has announced a benefits payment plan that will allow qualifying members to retain part of their savings with the Fund at the point of exit to avoid depletion of their life savings within a short period.
The innovation, dubbed NSSF Draw Down Payment Plan, will be eligible to members who qualify for Age Benefit and Withdrawal Benefit.
According to the NSSF Act, Age Benefit is paid to a member of the Fund “if he or she attains the age of fifty years and has retired from regular employment; or if he or she attains the age of fifty-five years”.
Withdrawal Benefit is paid to a member of the Fund “if he or she attains the age of fifty years; and if he or she has not been employed under a contract of service for a period of one year immediately preceding his or her claim”.
Withdrawal Benefit is also paid to “any person who ceases to be a member of the fund by virtue of being employed in excepted employment”.
Speaking to media at the launch of the plan at Workers House, Patrick Ayota the Fund’s Deputy Managing Director said the plan will enable qualifying members utilise their NSSF savings slowly as they work through a retirement plan/investment that works for them.
“We have received several requests from qualifying members to pay them a portion of their savings and pay them the balance in installments as they finalize their investment plans for the large sums saved.” Ayota said.
“It helps to extend income security during retirement because a member can decide how much they wish to retain in their NSSF account and when they wish to claim it all. This will enable our members avoid the risk of burning out life’s savings upon payment of a lump sum at a go by cushioning against losses, which may arise out of making rushed investment decisions,” he added.
The Draw Down Payment Plan was informed by a survey conducted amongst 45- 60 year old members where 62% said they would consider the payment of their benefits in installments rather than receiving them in a lump sum.
According to an earlier internal survey by the Fund, more than 70% of the beneficiaries had depleted their savings received from the Fund within two years, and most wished they had had an opportunity to receive their savings in installments.
Members also will have an opportunity to maintain a cash flow pattern that they may have been familiar with while still in employment.
Ayota also said that members that enroll for the plan would continue to receive annual interest on their balances retained by the Fund in line with the interest that will be declared by the responsible minister in a given Financial Year.