EFACTS: Electronic Fund Administration Compliance and Tracking System

CORPORATE GOVERNANCE AND RETIREMENT FUNDS – A NEW ELECTRONIC TOOL FOR TRUSTEES

The maintenance of a retirement fund is actually very similar to the maintenance of a motor vehicle. As we all know, a motor vehicle is an operating system comprising of the mechanics and electronics, and of course a body. More and more product providers are raising the level of electronic sophistication, based on generic technology that is developed by specialists and made available to anyone who might be interested. When you buy a luxury car in Namibia today, electronic faults are often diagnosed and can even be fixed by a computer that is likely to be located anywhere else in the world but in Namibia. So we don’t really have to have specialists here in Namibia to maintain the electronic system. But when it comes to the basics of maintaining the mechanical system, you would really have a problem if there was no one here to do this for you. What we need are persons that know and understand the Namibian environment, be it climate, geology, economy or legislation, while experience will be an important requirement to keep the mechanical system going.

This is the basic premise that industry leader Retirement Fund Solutions business model is based on, namely to focus on the basics of keeping your retirement fund going and it prides itself of employing many of the best qualified and most experienced staff available in its field of business in Namibia.

When it comes to sophisticated technology, this can be acquired and can be maintained anywhere in the world, but it must be appropriate to be functional and to make this assessment, its staff is in the best position to make that call.

In the line of technology Retirement Fund Solutions is busy installing and testing a sophisticated Electronic Fund Administration Compliance and Tracking System, a first for Namibia, which will also be made available to other retirement funds in Namibia.

Since the ultimate responsibility for a retirement fund, within a very strict statutory regime, rests with the trustees who rely on the various parties to the fund to perform certain contracted duties, they can never abdicate from their responsibilities. What’s worse, they can even be held responsible in their personal capacity!

Due to the involvement of so many different service providers, it is impossible for the trustees to be totally in control of all the processes of the Fund and any non-compliance is usually only discovered long after the event, if at all.

For instance, a new member record must be created for every new employee while every person whose employment is terminated for whatever reason, must be exited and must receive his or her benefit in time. The employer is, under legal sanction, required to pay the monthly contributions for every employee in time. Surplus funds must be invested in time and when more has to be paid out than what was received in any month, a portion of the fund’s investment must be realised to cover the excess expenditure. Rules must correctly reflect the benefits offered by the fund and must be approved by Namfisa and Inland Revenue, for the employer and its employees to enjoy the tax concessions and statutory approval that are applicable only to approved retirement funds.

Up to now there were no claims or contributions tracking or performance monitoring systems in place that trustees and principal officers and any other stakeholders have access to. This leaves trustees very exposed.

The problem is that there is no mechanism or conduit currently in place whereby the trustees can monitor, on a real time basis, as to whether the various Parties to the Fund are performing their duties in terms of the fund rules, the legislative environment and in terms of service level agreements. In other words, although trustees are ultimately responsible for all these processes, they have not, as yet been provided with any means to monitor these business transactions on a daily basis.

The system now being installed and tested by Retirement Fund Solutions is designed to provide trustees with the means to actually be ‘in charge’ of the affairs of their fund. This system is first and foremost a technological platform and an independent agent that forms the conduit between the key service providers to the fund. In effect it is an ONLINE, INDEPENDENT, FUND ADMINISTRATION MONITORING AND COMPLIANCE SYSTEM. It is the first to give employers the convenience of transacting electronically with Retirement Fund Solutions as administrator of their fund, with all the convenience that this brings, including: tracking, diary, query facilities, transactional archive, data warehousing, payment balancing, member data balancing, non-compliance alerts, and more……..

So, instead of the various parties to the fund transacting exclusively with each other, the system creates a central platform and data warehouse, with built in compliance, governance and service level measurements to alert and make trustees aware of the state of business transactions within the entire fund environment at any time. The other service providers, i.e. investment managers and the auditor are provided with reporting facilities.

For more information, e-mail Charlotte Drayer, Marthinuz Fabianus or Tilman Friedrich .