Planning for retirement? There are a few things you need to understand about products available on the market, as Brian Bongomin, Manager Business Development & Operations at Enwealth Financial Services Limited explains. Retirement planning is divided into two main phases – accumulation and de-accumulation. In the accumulation phase, people are younger, highly productive and are expected to save. The market offers products that allow you to build your savings. The Ugandan market has over 60 retirement benefits schemes, regulated by the Uganda Retirement Benefits Regulatory Authority.

When one leaves active employment and retires, they enter the deaccumulation phase. The kind of products here depends on how people saved. If they are in a pension fund, they will get monthly payments for a lifetime. If they are in provident fund, they will get a lumpsum or monthly payments.

There is evidence that most people lack the ability and the discipline to manage these lumpsum payouts. People don’t now how to deal with such large sums of money at ago. They make mistakes. The market offers products that can help retirees manage their savings better. One of the options available is the income draw down. Here you put your portfolio in a fund where you are paid periodically while still getting interest. You are directly involved in monitoring your portfolio. Should you fall out, the residue is given to you or your beneficiaries. The second alternative is an annuity. You take your lumpsum to an insurance company and pay you for life. Unlike the income draw down, you cannot opt out of annuity because you have already committed your money.

Medical cover is the other alternative available. Health bills can take you by surprise. Moreover, in old age, there are more illnesses which may require huge sums of money per day. If you don’t have insurance, those bills are a direct hit to your savings and your income. If you don’t have cash, most likely you will borrow, but how many senior people can actually borrow? It is better to absorb the shock by securing health or medical cover. Health cover is available on the market, use it! Some of these products come at no direct cost to the member because the fund manager manages the portfolio and the related risks.

The cost is paid in form of interest they earn from the investment proceeds. However, for medical cover there is a direct hit to the member. Whatever you opt for, it is important to at least have periodic payment because cashflow is very important in retirement. Retirement benefits in our market have a lifespan of two to three years, regardless of the amount. But when you explore and exercise the available products, you can be sure of prudent management and your savings will spread beyond the three years.