Online Reporter
When Gogo Mutema turned 60, she celebrated with eager anticipation of her retirement benefits.
After 35 years of working as a bank teller, she had finally reached retirement age and looked forward to peaceful days with her grandchildren.
Her pension payout felt adequate after all, she had budgeted for roughly 10 to 15 years of life after retirement.
But years passed quickly. By the time she turned 75, her savings were running low.
Medical bills were rising, groceries cost more than she had imagined, and her once-steady pension no longer met her daily needs.
This story is fictional, created to illustrate a common challenge faced by pensioners, but the lessons it conveys are very real.
While in the early 2000s, life expectancy fell to the mid-40s, rapid improvement in health care, lifestyles, and nutrition reversed the decline.
People are living much longer than previous generations.
In Zimbabwe, and around the world, it is now common for retirees to live 20, 25, or even 30 years after retirement.
While this is a positive development, it also creates a financial challenge commonly referred to as a pension gap, where one’s pension does not last until their death.
Many pension plans were originally designed decades ago when life expectancy was lower. A worker might have retired at 60 and lived to 70 or 75 years.
Today, reaching 85 or even 90 is no longer unusual. Without careful planning, a retiree can outlive their savings, leaving them vulnerable in the very years when healthcare costs are highest and earning a wage is most difficult.
The possibility of outliving your pension is one of the greatest financial threats facing today’s retirees.
It silently erodes financial security. A pension that looks generous at retirement can become inadequate when spread over decades of rising prices.
Inflation compounds the problem as the same monthly benefit that comfortably covered expenses at age 65 may buy far less by age 80.
Gogo Mutema’s experience illustrates how easy it is to underestimate the length of retirement.
She planned for 15 years but lived well beyond that. Her monthly pension, once sufficient, gradually lost value while medical expenses increased.
Eventually, she relied on her children for support, something she had hoped to avoid.
To guard against this risk, workers, retirees and trustees of pension funds need to take proactive steps long before retirement.
The earlier and more significantly you contribute to your pension, the larger your retirement pot will grow through compound interest.
Small increases today can mean the difference between running out of money and enjoying financial independence later.
It is equally important to preserve your benefits when changing jobs.
Medical expenses also need to be planned for, as they often rise sharply with age. Build a retirement plan that includes medical cover or an additional savings buffer.
Boards of funds (Trustees) and employers play a crucial role in helping members prepare for longer retirements.
Trustees should offer members clear projections that include life expectancy assumptions, ensure investment strategies aim for growth to keep pace with inflation, and provide education on annuity options and longevity risks.
Employers can support employees by encouraging early membership in pension schemes, offering meaningful contribution rates, and organising financial literacy sessions so that workers understand the importance of planning for a long retirement.
The Insurance and Pensions Commission (IPEC) urges all workers and pension fund members to plan for longevity.
Zimbabweans are living longer, and that is good news, but it requires careful preparation.
Pension contributions should not be treated as an afterthought.
They are the lifeline that will sustain you when you can no longer earn a salary, and trustees must factor longevity into their investment decisions so that funds aim for returns that protect members’ savings against both inflation and the possibility of decades-long retirements.
Living a long life is a blessing, but without adequate planning, it can become a financial burden. Gogo Mutema’s fictional story is a warning: it is no longer enough to plan for a short retirement.
Whether you are 25 or 55, the question is the same, will your pension last as long as you do? Start contributing early, review your benefits regularly, and consider lifetime income options.
A pension is meant to provide dignity, independence, and peace of mind, not just for a few years, but for every year you are alive.
About IPEC
The Insurance and Pensions Commission (IPEC) is a statutory body established in terms of the Insurance and Pensions Commission Act [Chapter 24:21] to regulate the insurance and pensions industry for the protection of policyholders and pension scheme members.
For feedback or enquiries, please contact us at: [email protected].
