Monday 31 August 2015

The Need to follow global world practice-Odunze Reginald C





Image credited to azcapitoltimes

The idea of enacting the pension reform act 2004 came up when the committee set by the federal government in conjunction with bureau of public enterprises’ on the sale of NITEL and NEPA, and other government parastatal discover that the foreign buyers could not price it effectively because of huge pension liabilities. Because one question they continuously ask is are you operating define benefit scheme or define contribution scheme.
The committee subsequently reported to the presidency and the result was formation of a committee to look into ways of reforming the pension scheme. The result was the pension reform act 2004.
The global world practice in pension is defined contribution scheme. Wikipedia noted that “In a defined contribution plan, contributions are paid into an individual account for each member. The contributions are invested, for example in the stock market, and the returns on the investment (which may be positive or negative) are credited to the individual's account. On retirement, the member's account is used to provide retirement benefits, sometimes through the purchase of an annuity which then provides a regular income. Defined contribution plans have become widespread all over the world in recent years, and are now the dominant form of plan in the private sector in many countries. For example, the number of defined benefit plans in the US has been steadily declining, as more and more employers see pension contributions as a large expense avoidable by disbanding the defined benefit plan and instead offering a defined contribution plan.
Continuing Wikipedia noted “Money contributed can either be from employee salary deferral or from employer contributions. The portability of defined contribution pensions is legally no different from the portability of defined benefit plans. However, because of the cost of administration and ease of determining the plan sponsor's liability for defined contribution plans (you do not need to pay an actuary to calculate the lump sum equivalent that you do for defined benefit plans) in practice, defined contribution plans have become generally portable”. Continuing Wikipedia noted that “In a defined contribution plan, investment risk and investment rewards are assumed by each individual/employee/retiree and not by the sponsor/employer, and these risks may be substantial.
The "cost" of a defined contribution plan is readily calculated, but the benefit from a defined contribution plan depends upon the account balance at the time an employee is looking to use the assets. So, for this arrangement, the contribution is known but the benefit is unknown (until calculated).”

The idea of a defined contribution plan cannot be over emphasized as one special of our Retirement Savings Account is that of portability.
Portability: where an employee transfers his employment from one organization to another, the same RSA shall continue to be maintained by the employee
It also reduces the employer’s liability in the event of retirement, it also enhance the marketability of a business entity in cases of acquisition, amalgamation and even outright purchases.
It also makes it easy for entry strategies of multinationals in other countries.

Odunze Reginald is the Lead Consultant, Chareg Consulting, a management and marketing   consultant a social media and social marketing consultant, you can visit our twitter anchor @regydunze, find us on Facebook @ Reginald odunze and reginaldodunze.com, at Google+ @ Reginald Odunze and at LinkedIn Reginald odunze.

Friday 28 August 2015

Three ways to invest a £150,000 pension-By Kyle Caldwell


We outline three investment strategies for savers who split their pension pots into two






























Splitting £150,000: decision time for Kenneth and Diane Orwin 
Older savers on the verge of retirement have a new world of choice on how they draw an income from their retirement fund. This is thanks to new freedoms designed to let over-55s have unfettered access to their money, which were introduced in April.
These freedoms aren't working for everyone as millions of people are being blocked from getting flexible access to their pensions – as this newspaper has highlighted in our Make Pension Freedoms Work campaign.
But despite this the changes have had positive effects. Before the changes, it was commonplace for retirees to feel forced into buying a guaranteed income for life, in the form of an annuity. A reliable income may be attractive, but many of these deals were poor value — and annuity rates are now close to an all-time low.
But more people now also have the option to leave money invested, giving them the potential for higher returns, and the ability to take cash when they need it. This is known as "drawdown".
How you choose to live off your pension is one of the biggest financial decisions you'll make. But if you are agonising over whether to buy an annuity or use drawdown, you can relax. It's perfectly possible to have both. And a growing number of people are choosing to adopt this strategy. Here we outline how splitting your pension pot in two could work, as well as the investment strategies that you could use to grow your money.

Why should you split a pension in two — and can you afford to?

By choosing drawdown alongside an annuity you would combine the security of a lifetime income with the risk and potential for higher returns from drawdown. But according to David Penny, an adviser at Somerset-based Invest Southwest, there is no "magic number" when it comes to whether a pension saver can use a mix of annuities and drawdown.
One rule of thumb is to calculate how much you need each month for bills and how much will be covered by your state pension. Then use an annuity to top up the rest of your basic income requirement. The rest can go into drawdown.
If the end result is that you can only afford to put £50,000 of your pension money towards drawdown then you should consider a different option.
This is because some pension firms insist on a minimum investment of £50,000 for drawdown. In any case, experts say the income generated via drawdown on pots of £50,000 or less will only amount to a couple of thousand pounds, which will be reduced further by the self-invested personal pension (Sipp) and fund charges, which typically amount to over 1pc.

How to invest your pension in drawdown

The next step is to decide what you would like to achieve with the remainder of your pension portfolio. Financial advisers say investors who mix and match can afford extra investment risk — given that they have secured their essential income via an annuity.
But with today's savers expected to spend far longer retired than their predecessors, they should spread their risk across a range of asset classes. It's important to diversify by investing in a mix of assets such as shares, bonds and property to keep the pension pot growing in retirement. We asked financial adviser firms Cockburn Lucas and Invest Southwest to come up with different models for pension savers with different goals and tolerance for risk:

1. Be prepared to take risk to get 5pc income

To achieve this you should invest around 60pc in shares, as shown in the first chart below.

Bonds play a smaller part, at 28pc, because returns are too low. Our experts suggested buying specialist funds that prioritise income. Options include Schroder Income Maximiser (yielding 7pc) and Fidelity Enhanced Income (6.2pc). The funds use a complex, but effective strategy. In effect, the manager sells investors' rights to some future capital growth in return for cash, which boosts the "natural" income from the assets.

2. Get 4pc income with a cautious strategy

Savers who want an annuity-like income and worry about their capital depleting should aim for 4pc income.

As the second chart shows, 40pc of the pot should be in shares and 45pc in bonds. For the equities part, Laith Khalaf of Hargreaves Lansdown suggests Marlborough Multi-Cap Income (4.1pc), Woodford Equity Income (3.5pc) and Newton Global Income (3.5pc).

3. Leave your pension as a legacy

If you don't intend to spend your pot you can afford to take a higher risk, with 70pc in shares. With a 30-year timespan Mr Penny says he would recommend a similar strategy to someone in their mid-thirties who has just started saving for retirement.

"This scenario is where I believe the pension revolution is likely to have an impact on children," he said. "Currently suffering under the weight of student loans, and the need to generate a deposit on a property, this generation can be massively advantaged by responsible parents and grandparents bequeathing these funds entirely tax-free.''

Case study: How to split a £150,000 pension pot

Kenneth Orwin, from Morecambe, was a scaffolder before retiring this year, and wants to enjoy a comfortable but modest retirement, including one or two holidays a year with his wife Diane. He has a Sipp worth £130,000, and £26,000 in a workplace pension. He hopes this will provide an income of £5,000 a year, £4,000 of which will go on basic living costs.
Mr Orwin says: "I like the idea of securing living expenses through the annuity while investing the rest because I want the freedom to dip into the pot when I wish." Mr Penny suggests taking out a £70,000 joint annuity with 50pc spouse's benefit on death. This would give £3,990 a year guaranteed income while they are both alive.
He said: "If they are happy to take risk, they could use their 25pc tax-free lump sum (worth £32,500) to invest their full Isa limit now. The remaining £53,500 of pension could be invested in drawdown.
"Isa and drawdown can be reasonably expected to pay 4pc a year, £3,440, bringing total annual income to £7,430, comparing well with the best full annuity, which would provide £4,639 via Legal & General."

Culled from Telegraph

Thursday 27 August 2015

The growing need for more women cybersleuths-Jennifer Schlesinger

Only one-fifth of US computer science and engineering degrees are earned by women

Amid high-profile breaches on websites such as Ashley Madison and the IRS, experts say the need for cybersecurity professionals—including women—is only growing.
Nearly 2 million global cybersecurity professionals will be needed by 2017, according to the National Cybersecurity Institute at Excelsior College. At the same time, the cybersecurity industry is facing a gender gap.
"One of the interesting things that we see is that 50 percent or more of those graduating from college are women, and 11 percent only are in the cybersecurity field," said Shelley Westman, vice president at IBM Security. "So what we see is as an industry, we're leaving a lot of talent on the table," she said.
Westman was among several keynote speakers at a New York City conference last month on recruiting more women to cybersecurity.
Professor Nasir Memon of New York University said the conference was designed to reach high school and college students as well as women looking to change careers. "We do that by getting leading women from industry and getting them to talk about what it is to be doing cybersecurity," said Memon, who heads NYU's computer science and engineering department.
Read MoreCriminals staging DDoS attacks available by hour anonymously

US women made up 26 percent of computing professionals in 2013—the same level as in the 1960s

Attendees at the NYU-Polytechnic School of Engineering Career Discovery in Cybersecurity listen as Shelley Westman from IBM speaks.
Source: CNBC
Attendees at the NYU-Polytechnic School of Engineering Career Discovery in Cybersecurity listen as Shelley Westman from IBM speaks.
Overall, the ranks of women in computing fields remain low. Women made up just 26 percent of computing professionals in 2013—the same level as in the 1960s, according to the American Association of University Women (AAUW).
"If you want to create a workforce ... you want to create a talent pipeline, you cannot simply ignore half the population," said Memon.
Beyond the U.S., other countries are leaving fewer women behind when it comes to computer science and engineering. In both Malaysia and Indonesia, women earn roughly half of the computer science and engineering degrees, while only one-fifth of those same degrees are earned by women in the U.S.
Not only can women fill the estimated nearly 210,000 vacant cybersecurity positions in the United States, they can also bring new perspectives.
"When you have a balanced team of both men and women, the teams are able to look at things a little bit differently and make sure that you're really looking at all causes, all effects and really get to the heart of the problem," said IBM Security's Westman.
And cybersecurity careers pay well.
The average industry salary is around $116,000 according to a survey by Semper Secure, an organization looking to draw more talent specifically to Virginia.

Culled from CNBC

Wednesday 26 August 2015

6 Retirement Tips for Millennials -By Ryan Guina



If you are a millennial, retirement planning is probably at the bottom of your financial priority list at this point in life. Finding steady employment, paying off student loans, mortgage payments and kids are all likely front and center when it comes to your finances. However, just because you have other more immediate financial needs, don't neglect planning for your retirement. The early steps that you take in your twenties and early thirties can have huge benefits 30 to 40 years later in life.
Here are six retirement tips for millennials as you start your retirement planning.
1. Live well below your means. Many financial experts will tell you to live within your means when it comes to your personal finances. While living within your means will keep you from going into debt, it won't help you build wealth or fund your retirement. Instead of just getting by every month and living within your means, try to live below your means. Living well below your means can accelerate your wealth and help you to build your retirement savings.
2. Take the free money. Don't ever pass up employer matching programs for retirement savings at your workplace. Whether it is a 401(k), 403(b), Thrift Savings Plan or other retirement plan, many employers offer some type of retirement plan matching, usually up to a percentage of your contributions. This is basically free money that you cannot afford to pass up. In order to get a head start on your retirement, you need to take advantage of any employer sponsored plans while you can.
3. Use a free budgeting tool. In order to properly plan for your retirement, you will need to have a budget. If you don't know how much income you are bringing in and how much you are spending every month, it's very difficult to figure out how much you can and should be saving for retirement. There are several great free tools that can help you set up a budget. For example, Personal Capital will let you link all of your financial accounts, including savings, credit cards, checking and investment, into one central place. This is a powerful tool that lets you see your overall spending, savings and investments on a single screen.
4. Start saving (or investing) as soon as possible. Take advantage of compound interest, and let your investment dollars do most of the work for you. Time to let your savings grow is the most powerful tool at your disposal. Even if you invest small amounts of money early on, they can grow to impressive amounts once you start earning compound interest.
5. Invest your raises. If you are already living below your means, this will make it easier to invest any raises you get as you start to advance through your career. There may be the temptation to buy a better car or move up to a larger house as your income grows. If you are serious about retirement savings and building wealth, don't let lifestyle creep get in your way. The same can be said about any windfalls of money or larger sums coming in from things like your tax return. Making the sacrifice now and investing this money will pay off hugely later in life.
6. Contribute on your own. Besides taking advantage of company sponsored retirement plans, it is important to save additional money for retirement on your own. Shifting even an extra $100 a month into investments will pay off. Remember that compound interest is your best tool for building up your retirement account, and as a millennial you still have time on your side. If you need help staying on track, consider setting up automated investments to a retirement account.
The best time to start your retirement planning is in your 20s. Even if retirement seldom crosses your mind, taking a few small steps now will have a big impact as you approach retirement

Culled from US News

Tuesday 25 August 2015

Ten years left to retirement? How to supercharge your pension -By Kyle Caldwell

We outline five steps to give your pension pot a boost






























"I would like to give up work in 10 years’ time but my pension is likely to fall short of what I need for retirement.” This is a predicament a huge number of savers find themselves in.
But it is not too late to make changes so that your pension will be enough to retire on in 10 years’ time.
Here are five steps that could turbo-charge your savings.

1. The basics

First work out how much money you will need to retire on, taking into account all of your likely income and outgoings when you give up work.
Once you have a shortfall figure the next step is to increase your pension contributions as much as you can . If you have a company pension, make sure you take full advantage of any “contribution matching” by your employer. This can be 10pc-15pc of your salary.
But putting more money into the pension is only half the story. We’ll now look at your options when it comes to investing it.

2. Put some money into ultra-safe funds

Many financial advisers, including Alistair Cunningham of Wingate Financial Planning, say pensioners should still consider buying an annuity with some of their pension savings, despite the end of compulsion and the fact that annuity rates are currently poor. This is because nothing else can guarantee an income to cover essential spending.
Anyone who adopts this approach will have to sell some of the investments in their pension pot when they retire. To avoid crystallising a loss – if, for example, the markets fell sharply just before you retired – this part of your pension should be invested more conservatively.


Some funds are run in an extremely cautious manner with the aim of preserving capital if stock markets fall. Two that are regularly tipped are Personal Assets Trust and the Ruffer Investment Company.
Darius McDermott of Chelsea Financial Services, the fund shop, tipped the Newton Real Return fund, which has produced a positive return every year since 1998.
Another approach is to gradually switch to safer assets as retirement approaches. “With five years to go, a split of 75pc in bonds and 25pc in cash is appropriate to protect capital,” Mr Cunningham said.

3. Buy growth funds now and switch to income funds at retirement

Where should you invest the rest of your pension to maximise growth? Historically, the stock market has offered the best returns, although there is always the risk of falls. So some advisers recommend a mix of shares and bonds, with perhaps 60pc in the stock market.
Global funds, thanks to the diversification they offer, should make up the bulk of your exposure to shares. Favoured funds include Fundsmith Equity, managed by Terry Smith. If you prefer tracker funds, the Vanguard FTSE Developed World ex-UK Equity is the cheapest option, charging 0.15pc a year.

This approach will require you to switch funds at or before retirement. But if you plan to make the switch into income funds the day you quit work, your growth funds will be exposed to the risk of a crash as retirement approaches. So you may want to make a gradual switch to income-producing funds.
Philippa Gee (right), of Philippa Gee Wealth Management, said: “Normally with 10 years to go pen­sion savers are encouraged to take risk off the table . But for those who do not have enough money, 10 years is enough time to ride out the peaks and troughs of stock markets.
“At retirement, however, pension savers will want to switch into some income investments, and with bonds offering little value, UK income or global income funds are the preferred options.”

4. Buy income funds now and stick with them after retirement

Many investment experts say income-producing assets are best for growth, with income simply reinvested. When you retire, you can start taking the income instead.
Savers who choose this option will not have to sell their funds at retirement and should not worry too much about the ups and downs of the stock market as long as the income is maintained.


Brian Dennehy, of Fundexpert.co.uk, the fund shop, favours this approach. He said bond funds, popular with savers looking for a reliable income, should be avoided at the moment. Bonds had enjoyed a “good run”, he said, but had now become so expensive that they did not provide income with inflation protection.
Instead he favours funds that own dividend-paying shares, tipping JO Hambro UK Equity Income and Schroder Income.
“If UK and global income funds are going to be the mainstay of your income generation then why not start investing into them now and reinvest the income?” Mr Dennehy said. “History shows that this strategy outperforms the stock market 85pc of the time over 10-year periods back to 1900.”


Ms Gee agreed that bonds looked “expensive” but said a conservative saver might want 20pc or 30pc of their portfolio in bond funds. Popular choices are Jupiter Strategic Bond and Henderson Strategic Bond.
Many investment trusts have excellent track records of growing dividends each year. Some, such as City of London, Alliance Trust, Bankers, Caledonia and Foreign & Colonial, have increased dividends for more than 40 consecutive years.

5. Review your investments regularly

It is essential to keep on top of your pension investments and review them regularly. Ms Gee recommended doing so at least “twice a year”.
Bonds may look a bad buy today but in five or 10 years’ time could once again be the best option for savers who want reliable income, for example.
Regular reviews will also help ensure that your pension does not become too exposed to a particular investment that has performed well.

Culled from Telegraph

Monday 24 August 2015

7 Habits That Could Be Sabotaging Your Finances Kirsten Klahn


Source: Thinkstock
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Source: Thinkstock
You scrimp, save and bargain shop all in hopes of sticking to your monthly budget. While these are all practices designed to help you live a financially stable life, some of your well-intentioned habits may be causing more harm than good. Check out these seven financial habits that could actually be putting a dent in your wallet.

1. Your budget is too tight

You know when you follow a super-strict diet and eventually end up indulging in the foods you’ve been craving for months? Something similar happens when you follow an unrealistic budget. Following a budget is great. But following one that prevents you from spending money on an occasional indulgence isn’t healthy.
According to Affordable School Online, you’ll be more successful implementing small budget changes over time, while working toward a larger goal, such as cutting down on monthly expenses. Strict budgets limit your opportunities, meaning the chances you may have to experience something great or purchase something you need or want at a deep discount. You don’t want to get to the point where your budget feels like it’s causing you to miss out on once-in-a-lifetime purchases and opportunities, per Affordable School Online. Use your budget to prevent yourself from going on shopping sprees and impulse shopping – don’t let it control your life.

2. You buy items just because they’re on sale

Source: Thinkstock
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Source: Thinkstock
“So often, we find a deal that is too good to pass up, yet we wouldn’t have even bought the item or service if it had not been mentioned to us,” Ozeme J. Bonnette, author of Get What Belongs to You: A Christian Guide to Managing Your Finances, explains to Daily Worth.
A sale, which is typically thought of as a budget-friendly word, can actually be extremely dangerous. The worst can be clothing sales, which lure buyers to pick up stuff they don’t need just because items are labeled as half off. To fight tempting sales, unsubscribe from store newsletters and catalogs. In addition, don’t approach sales as being good for your wallet unless something you need has been marked down.

3. You buy more to get a discount

Source: Thinkstock
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Source: Thinkstock
How many times has a retailer talked you into picking up one or two more items in order to take advantage of a discount? A great example of this is free shipping. How often have you been shopping online and added a few more items in order to qualify for free shipping?
Free shipping is great if you actually need the stuff you’re buying. It’s not nearly as good if you’re buying items you don’t need just to take advantage of the “deal.” Yes, paying for shipping is annoying. But spending more than necessary just so you don’t have to pay for it isn’t a good financial move.

4. You buy a coupon to save money later

Source: Thinkstock
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Source: Thinkstock
A perfect example of this is Groupon or LivingSocial, which send daily emails detailing the best deals in your area. The problem is many people often pick up coupons for things they’ve never even thought about doing. MSN writes that people purchase these coupons, forget about them, and then they expire, resulting in a huge waste of money. Make sure you’re only using these services for items you know you’ll use, such as one that’s for your favorite restaurant. There’s a much better chance you won’t forget about it if it’s something you actually like.

5. You commit to a long-term gym contract

Source: Thinkstock
<a href="http://us-ads.openx.net/w/1.0/rc?cs=07f189b5e0&cb=1440397567449&url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F7-habits-that-could-be-sabotaging-your-finances.html%2F%3Fa%3Dviewall&c.width=632&c.height=94&c.tag_id=21781&c.taglink_id=33490&c.scale=1.1518987&c.url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F7-habits-that-could-be-sabotaging-your-finances.html%2F%3Fa%3Dviewall&c.params=&c.impression_type=26" ><img src="http://us-ads.openx.net/w/1.0/ai?auid=538013270&cs=07f189b5e0&cb=1440397567449&url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F7-habits-that-could-be-sabotaging-your-finances.html%2F%3Fa%3Dviewall&c.width=632&c.height=94&c.tag_id=21781&c.taglink_id=33490&c.scale=1.1518987&c.url=http%3A%2F%2Fwww.cheatsheet.com%2Fpersonal-finance%2F7-habits-that-could-be-sabotaging-your-finances.html%2F%3Fa%3Dviewall&c.params=&c.impression_type=26" border="0" alt=""></a>
Source: Thinkstock
Don’t make a two-year commitment to a gym as a way to force yourself to exercise. Many people sign a long-term gym contract, only to stick with it for a few months and then spend the next year and a half paying for a membership they don’t use.
“Signing a long-term commitment for a gym membership can be a bad move,” Clare Levison, author of Frugal Isn’t Cheap, explains to The Street. “You might save $5 or $10 a month by signing up for a year. Then you don’t use it — so it really wasn’t a better deal. It might be a better idea to pay more monthly until you’re sure you’re going use it. At the end of three months if you decide you’re going to quit going to the gym, you can just stop. You haven’t committed yourself to a year’s worth of payments.”

6. You over save

Source: Getty Images
Source: Getty Images
Yes, there is such a thing. You save because it gives you financial freedom and lets you do the things you want. However, if you take it too far, you may be missing out on many things. Consumerism Commentary writes that the point of saving is to eventually do something with that money. Saving is the “desire to do something now for the chance of doing something more later. Those nurturing a superfrugal mindset argue you should always choose the latter. The problem with the future is it never arrives regardless of how long you wait. Even though there is always a place or time or dollar amount where you can draw the line and begin living your life, that line may never come.”
Should you save? Yes. But it’s a balancing act. Set aside money, but let yourself enjoy those savings occasionally. And make sure as you’re saving, you’re working toward rewards, such as a vacation or even a down payment on a home.

7. You buy the cheapest of everything

Source: Thinkstock
Source: Thinkstock
If you always gravitate toward the cheapest item, there’s a good chance you’ll end up spending more over time, Kyle James, owner and founder of Rather-Be-Shopping.com, explains to Daily Worth. Instead, look at spending a little bit more on some items as an investment. For example, it may be tempting to skimp on pricey tools, but cheaper versions often have to be replaced right away.
Do your research before buying an expensive item. Take the time to ensure it’s a quality product, and then tell yourself it’s worth the extra money because you won’t be replacing it in the near future. How do you know when to cut back and when to splurge? For office supplies, a visit to the dollar store is fine. But when it comes to a nice TV or laptop, it’ll pay to invest in quality, per Daily Worth. It doesn’t need to be the most expensive product on the market, it just shouldn’t be the cheapest either.

Culled from Cheatsheet