Section 19 (5) - housing loans
Section 19(5) defines the parameters for a fund granting a loan to a fund member. The Act introduces the following changes, all other conditions remaining unchanged:
- Loans may also now be granted for the purchase of land, the erection of a property on land, or for alterations, maintenance or repair of a property on land, in respect of which a valid customary land right or right of leasehold has been granted in terms of the Communal Land Reform Act, subject otherwise to the same conditions as apply to land held under 'conventional' property rights.
- Loans shall be repayable over the shortest period of either 30 years, the remainder of the member's employable years until retirement, or the duration of the right of leasehold/ customary land right as referred to in the preceding bullet.
- Loans are capped at 90% of the amount of the benefit which the member would receive if he were to terminate his membership voluntarily at the time of taking up the loan.
- Reference to the Black (Urban Areas) Consolidation Act, as a qualifying ownership right, is removed.
It is to be noted that the Pension Funds Act only creates the enabling legal framework. A fund whose rules do not provide for granting loans may not grant loans despite the enabling provisions of the Act.
It is to be noted further that the rules of a fund may cap the maximum loan that may be granted to an amount lower than 90% of the termination benefit (i.e. not the retirement benefit or a commutation thereof).
It is to be noted that in the case of a loan granted to a member, secured only by the member having pledged his benefit, market value is no longer relevant.
Section 37D - deduction from benefits for housing loans for housing loan guarantee
Amendment Act no 6 of 2014 also amend section 37D of the Pension Funds Act. Section 37D defines the parameters for a fund deducting certain amounts from the benefit of a fund member. The Act introduces a change to sub section (a)(ii), (all other conditions remaining unchanged), which now reads as follows:
"A registered fund may -
(a) Deduct any amount due to the fund in respect of - ...
ii. any amount to which a fund is liable under a guarantee furnished in respect of a loan by some other person to a member for any purpose referred to in section 19 (5) (a), but the fund shall not be liable to such other person in an amount greater than the amount of the benefit which the member would receive if he were to terminate his membership of the fund voluntarily as at the time the guarantee is called up0n and notwithstanding that the amount originally granted might be greater."
Interestingly a part of the wording in the previous section referring to such permissible deducting being "...from the benefit to which the member or beneficiary is entitled in terms of the rules of the fund..." was removed. This may yet create arguments between a fund and a member on the basis that this section does not permit the deduction from the member's benefit, although it appears that the intention of this section remains just that.
It is to be noted in particular that in our opinion, for the purposes of a third party (employer of bank) claiming from a fund in respect of a member's housing loan, the benefit due to a member is not the gross benefit as per rules but is the net benefit after PAYE (in the opinion of Inland Revenue also after arrears taxes). A fund cannot be held liable by a third party (employer or bank), to pay over more than the member's net benefit. We believe that banks and any employer that has been granting housing loans to fund members on the basis of a fund guarantee are likely to terminate their housing schemes and will seek to call up any outstanding loans, without delay.
Section 37D - deduction from benefits for housing loans for loan granted by fund to member
Where a fund grants a loan directly to a member, it can deduct up to 100% of the member's benefit, in the event of the member having been granted 90% of his benefit and the Receiver of Revenue claiming 10% PAYE. However, should the Receiver claim PAYE at the maximum rate of 37%, any outstanding loan balance in excess of 63% of the members total benefit will have to be recovered from the member. To avoid the situation where the fund has to recover any outstanding loan balance from the member personally, loans should be limited to 63% of a member's total benefit. Note that Inland Revenue will only be able to claim any arrears tax to the extent that any amount is still due to the member after the loan has been redeemed and any PAYE deducted.
Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.
|RFS offers value for money||
|Level of expertise meets my needs||
|Standard of service meets my needs||
|I have confidence in RFS||
|I am satisfied with the level of attention I receive||
|RFS staff is friendly and helpful||
Managing Director Tilman Friedrich said the company was established on 1 September 1999 by himself and co-founder Mark Gustafsson, who left the company just over a year ago to pursue his own interests. He said the company's first employee, Charlotte Drayer, joined on 1 October of the same year, when the company was appointed to manage and consult on two funds.
Friedrich said the company celebrated its fifth anniversary with 8,000 members and N$ 1,3 billion under administration. At that stage, the company had a staff complement of 15. In 2009, when it celebrated its 10th anniversary, the company had a staff of 41 to administer N$ 6 billion on behalf of 21,000 members. On its 15th anniversary, Friedrich said the company has a staff complement of 59, and administers assets of N$ 14.5 billion on behalf of 35,000 fund members.
Company Founder and Managing Director Tilman Friedrich spoke about the establishment, history and successes of Retirement Fund Solutions.
On the topic of the Benchmark Retirement Fund, which was established by RFS to administer pension investments on behalf of individuals and smaller entities, Friedrich said the fund has grown apace, and administers investments of N$ 1.5 billion for 8,000 members.
Friedrich attributed the growth of the company to its emphasis on governance and compliance to give trustees peace of mind. He said that Namibian pension funds want the assurance that due care and skill is applied to the management of their business, and that strict compliance with Namibian laws and regulations is observed, while the administration of their fund’s business is conducted in a manner which is responsive to the needs of the fund and its members.
In this regard, he said RFS has made a significant investment in technology with the acquisition of a disaster recovery site that will further strengthen its governance and offer peace of mind to its clients to a level typically only offered by large companies. He said the fact that the company’s IT infrastructure is not tied into a foreign parent network, or dependent on foreign expertise or support gives RFS the ability to be responsive to local requirements in terms of governance and compliance.
However he also noted that fund management and administration are driven by 'people helping people', and that RFS places a major emphasis on development of its human capital. He stated that the company supports individual development through formal and informal education, and that its in-house expertise provides a key competitive edge with ongoing on-the-job training so that staff can respond to the changing regulatory environment.
The RFS executive management team FLTR: Louis Theron, Günter Pfeifer, Sharika Skoppelitus, Hannes van Tonder, Tilman Friedrich, Frieda Venter, Kai Friedrich and Marthinuz Fabianus.
New role for Charlotte Drayer
Charlotte Drayer, Retirement Fund Solutions' first employee, who went on to become a Director of and shareholder in the company, has reached retirement age. Instead of retiring, she will take on a new role which will focus on development of products and systems. She remains a shareholder, but has decided to step down from the Board of Directors.
Charlotte Drayer joined Retirement Fund Solutions on 1 October 1999, and based on her conviction that the company would be a success, worked for seven months without a salary as the company grew its revenues.
Speaking at the 15th anniversary dinner, Deputy Managing Director Marthinuz Fabianus said that Drayer was the first person in Namibia to provide an 'A - Z' pension fund administration service.
Friedrich said the company' strengths are based on several additional factors.
He said that the administrator has rigid quality standards that are benchmarked against international best practices. This, he said, is supported by ongoing training and development of staff.
Friedrich went on to say that quality of service is attained particularly through personal involvement of the owners of the company in day-to-day client service. This ensures that potential problem areas are identified before they occur, contributing significantly to client satisfaction.
He also said that the company's empowerment policy is to develop individuals for upper tier management from within the company, and pointed out that six members of staff now hold shares and directorship, while an additional 17.5% of shareholding in RFS is assigned to other staff, as the result of which every permanent staff member now benefits from the wealth the company creates.
Keynote speaker Lynn Baker gave a lively speech on the topic of Executive Presence at the event.
On the topic of value, Friedrich said that the company has a policy of actively communicating regulatory change to clients, and assisting with development of knowledge to enable clients to make complex decisions regarding pension funds and investments through its monthly Benchtest newsletter.
Talking about the future of pension funds administration in Namibia, Friedrich returned to the topic of the regulatory environment. He noted that Namfisa, the regulator of pension funds in Namibia, is implementing new regulations at a rapid rate. These changes, he said, have require pension fund practitioners to consider not only compliance to the letter of the law, but also the needs of funds and their members. Responsive regulation, he said, will grow the financial sector by requiring administrators to expand their range of services.
Friedrich concluded by saying that the company would continue to grow as the financial services sector grows, but would continue with its sustainable approach of measured growth, to ensure that clients receive the level of excellence to which they are accustomed.
Retirement Fund Solutions
- About us
- Unlisted investments via unit trusts
- 2014 Sanlam benchmark Survey 1
- 2014 Sanlam benchmark survey 2
- Payment of unclaimed benefits to the Master of the High Court
- Unlisted investments - proceed with caution
- Professional indemnity cover and policy terms
- Regulation 28 and 29
- African Cup of Investments Conference 2013 Part 1
- Africa Cup of Investments Conference 2013 Part 2
- Africa Cup of Investments Conference 2013 Part 3
- Africa Cup of Investments Conference 2013 Part 4
- Africa Cup of Investments Conference 2013 Part 5
- Investment in foreign unit trusts
- What is your performance benchmark?
- Unclaimed benefits – a dilemma for trustees
- Should you rotate your service providers on a regular basis?
- What is a service worth to you? Part 1
- What is a service worth to you? Part 2
- Billion dollar milestones for RFS and Benchmark
- Dismissal – a major risk for the employer
- Pension or provident fund, lump sums or pensions - where to from here?
- Amendments of the Labour Act
- Has the pensions industry been led astray by its advisers?
- 2011 Market Trends
- Act 15 of 2011: what to do
- Income Tax Amendment Act, Act 15 of 2011
- African Cup of Investments Conference 2011
- Aims of the retirement fund
- Fund strategy
- How to invest in uncertain times
- The salary replacement ratio
- Preferred risk vs required risk
- Counter party risks
- Pitfalls of purchasing a pension
- Stress testing the life stage model
- How to handle fund disputes
- Employers on boards of trustees
- Good for the group or good for the member?
- Absence from work
- Staff absence and conditions of employment
- The fund and maternity leave
- Additional voluntary contributions
- The Master of the High Court
- Administration of deceased estates
- Foreign domiciled funds
- Housing loans for property outside Namibia
- Changes to the SA Estate Duty Act
- Namfisa issues revised draft amendments to regulation 1, 26, 27, 28 and 29
- Namfisa Reporting August 2013
- Can retirement capital be transferred from a retirement annuity to a pension fund at retirement?
- RFS supports Okanti Foundation
- Selecting asset managers to diversify risk
- RFS 15th anniversary speech
- 15 years of RFS
- RFS 15th anniversary client satisfaction survey
- Pension Funds Act amended with regard to housing loans
- Corporate philosophy
- Human capital
- Fund strategy
- Sind Sie fit für die Rente?
- Planning your retirement
- 15 years of RFS
- Contact us
- Browser Upgrade
Benchmark Retirement Fund
- Benchmark Home
- About Benchmark
- Why choose Benchmark?
- Fund membership until 75
- How to join Benchmark
- Full Individual Member Application
- Abbreviated Ind Member Application
- Terms & Conditions
- Beneficiary Nomination Form
- Claim Form Retirement & Death
- Investment Portfolio Change & Revised Fees
- Withdrawal Application Form
- Pensioner Application Form
- Pensioner Review of Instructions
- Pensioner Designated Survivor Form
- Investment portfolios
Fund fact sheets
- Allan Gray Namibia Balanced Fund
- Bank Windhoek Investment Fund (Money Market Portfolio)
- Investec Managed Fund Namibia
- Investment Solutions Namibia Balanced Growth Fund
- NAM Coronation Balanced Defensive Fund
- NAM Coronation Capital Plus Fund
- Old Mutual Namibia Profile Pinnacle Portfolio
- Prudential Namibia Balanced Fund
- Prudential Namibia Inflation Plus Fund
- Sanlam Namibia Active Fund
- Sanlam Namibia Balanced Fund
- Standard Bank Namibia Managed Fund
- Benchtest 2014-09
- Benchtest 2014-08
- Benchtest 2014-07
- Benchtest 2014-06
- Benchtest 2014-05
- Benchtest 2014-04
- Benchtest 2014-03
- Benchtest 2014-02
- Benchtest 2014-01
- Benchtest 2013-12
- Benchtest 2013-11
- Benchtest 2013-10
- Benchtest 2013 Archive
- Benchtest 2012 Archive
- Benchtest 2011 archive
- Benchtest 2010 Archive
- Benchtest 2009 Archive
- Early Bird
- Quarterly investment report
- 2013 Financial Highlights
- 2013 Actuarial Report
- 2013 Annual Report
- Benchtest Monthly
- Rules of the Fund
- Statements: Individuals
- Download documents
- Trustees and Principal Officer