A pension fund is a retirement plan which enables you to receive income even though you do not wake up every morning to go to work. In other words, a pension fund is an agreement between an employee and the company that the employer will take a portion of the employee’s income and contribute it towards a retirement income. When you are no longer fit to work or reaching retirement age, then you can retire and claim benefits from the pension fund. Employees have a choice between a pension fund and a provident fund and they need to understand the difference between the two so they can make informed decisions about their future income. Employees must consider the benefits of their choice of retirement package and determine if it will suit the kind of lifestyle they wish to live.

Most pensioners suffer because they failed to plan adequately for their future. Planning for retirement must start early in a person’s working life. Some people do not cultivate a culture of saving for the future, emergencies, or rainy days and they leave their retirement budget until it is too late to make any real value for money decisions and policy purchases. Working when an employee has retired should be chosen as a means to keep busy. Working after the recommended retirement age is, unfortunately, a sad reality that faces many workers that failed to effectively plan for the future. There comes a time late in a worker’s life when a worker will look back and see what they have accomplished in their professional and personal life before they retire.

People that can, after all things considered, safely say that they have invested enough towards a comfortable retirement income are very few in South Africa. People are urged to start saving early and invest in long term savings policies and retirement products early in their careers. They must consider the already ridiculously high cost of living and saddening inflation rate when decide how much to spend towards a sufficient income in future.