On 15 April 2015, Namfisa issued a circular on 15 April, requiring pension funds to submit a totally new type of report by 15 May for the first quarter of 2015 - under threat of penalties for late or non-submission, of course. Its predecessor report, a much shorter version, was just submitted for the first time at the end of February for the 4 quarters of 2014, after having given the industry close to 3 months to prepare for that version.
The new report, which has to be manually inputted into Namfisa's Electronic Regulatory System, comprises of no less than 53 pages of information and data plus another 7 pages per investment portfolio operated by a fund. An early version of this report, in Excel format was circulated to the industry in March 2014. At the time the industry expressed its concerns and reservations about this report. The cost of producing such a extensive report versus the benefits of having the information, the time it would take to program systems to record and produce the reports as well as the purpose and use of some of the information were questioned, without convincing response by the regulator.
When a new, much shorter report version was circulated later in 2014 the industry took comfort with this, because the investment related information was actually aligned with regulation 28, on which asset managers had to report for many years, while the other information, of a limited scale, by and large also already, had to be reported on for a couple of years.
During the regular 'industry meetings' arranged by Namfisa since the introduction of the abbreviated report version, no reference was made to the fact that Namfisa's programmers were actually busy programming the Electronic Reporting System on the basis of the extensive report initially circulated in March 2014. Even upon a follow up with a Namfisa official on the status of the requirements for the first quarter 2015 report a few days prior to the latest version having been circulated, the official confirmed that there was no change to the reporting format.
What a surprise to all concerned to find a few days later that the report has now actually been expanded from 1 page of general information and 7 pages of information per investment portfolio to the monster referred to above.
To make matters worse, the circular was issued 2 days before the start of the school holidays with a due date in the middle of school holidays over a period covering 3 short weeks, due to public holidays. The principal officer who asked whether the industry was intentionally kept in the dark all along may be forgiven.
Pension funds are now in the unenviable position that they are required to comply. Yet they will have to call on their service providers to assist while service providers will in most likelihood not be contractually obliged to meet this totally new requirement, and may in fact not be able to provide much of the required information due to the fact that their systems are not geared to capture, store and retrieve the information in the manner and format required. At best all parties involved will have to improvise and it may be expected that some of the information is not available or will be unreliable or inaccurate. How meaningful will such information be to the regulator?
Many pension funds have expressed their perception that the regulator is ruling autocratically, is exercising unreasonable pressure on their limited resources and is disregarding their concerns or suggestions. The concern was also expressed that funds are being systematically alienated through the approach of the regulator and that this will not be conducive to a spirit of mutual respect and co-operation.
Funds believe that the regulator does not appreciate the fact that the Namibian industry is totally dependent on layman trustees who are full time employees that are burdened with the additional responsibility of serving as trustee. Namibia has just over 100 registered funds with a membership of around 220,000. Eliminating the GIPF and umbrella funds, the average size of employer sponsored funds is around 500 members. For reference purposes it is relevant that the SA regulator takes the view that employer sponsored funds of less than 3,000 members are not viable on a stand-alone basis and should rather be accommodated in an umbrella fund. In terms of reporting though, even the SA regulator does not have such extensive requirements.
Ironically, NAMFISA seems intent on getting better insight on costs of managing pension funds and has given the impression that they may be concerned about these costs being too high.
To avoid alienation of pension funds and any confrontation, there is an urgent need that an independent and unbiased statutory mechanism is created under the Pension Funds Act that will objectively consider justified general concerns and objections of the pension funds industry and that has the authority to guide the regulator. Until such time, it will be purposeful for the Minister to play a role in introducing balance and fairness into the regulatory system.
Appealing decisions by Namfisa
Government notice no 160 provides an appeal procedure and form for persons wishing to appeal any ruling or decision of the chief executive officer of Namfisa made under the Namfisa Act. The new quarterly report is required in terms of the Pension Funds Act though, which does not provide for an appeal process. Funds should, however, consider using the procedure to appeal any other matter they may be aggrieved with which originated by Namfisa under the Namfisa Act,. It is to be noted that a person intending to appeal a decision of the chief executive officer in terms of the Namfisa Act must commence the appeal within 14 days of receipt of the notice.
Download the form here...
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.
PORTAL
BENEFITS
Comment: anger rising in the pensions industry
On 15 April 2015, Namfisa issued a circular on 15 April, requiring pension funds to submit a totally new type of report by 15 May for the first quarter of 2015 - under threat of penalties for late or non-submission, of course. Its predecessor report, a much shorter version, was just submitted for the first time at the end of February for the 4 quarters of 2014, after having given the industry close to 3 months to prepare for that version.
The new report, which has to be manually inputted into Namfisa's Electronic Regulatory System, comprises of no less than 53 pages of information and data plus another 7 pages per investment portfolio operated by a fund. An early version of this report, in Excel format was circulated to the industry in March 2014. At the time the industry expressed its concerns and reservations about this report. The cost of producing such a extensive report versus the benefits of having the information, the time it would take to program systems to record and produce the reports as well as the purpose and use of some of the information were questioned, without convincing response by the regulator.
When a new, much shorter report version was circulated later in 2014 the industry took comfort with this, because the investment related information was actually aligned with regulation 28, on which asset managers had to report for many years, while the other information, of a limited scale, by and large also already, had to be reported on for a couple of years.
During the regular 'industry meetings' arranged by Namfisa since the introduction of the abbreviated report version, no reference was made to the fact that Namfisa's programmers were actually busy programming the Electronic Reporting System on the basis of the extensive report initially circulated in March 2014. Even upon a follow up with a Namfisa official on the status of the requirements for the first quarter 2015 report a few days prior to the latest version having been circulated, the official confirmed that there was no change to the reporting format.
What a surprise to all concerned to find a few days later that the report has now actually been expanded from 1 page of general information and 7 pages of information per investment portfolio to the monster referred to above.
To make matters worse, the circular was issued 2 days before the start of the school holidays with a due date in the middle of school holidays over a period covering 3 short weeks, due to public holidays. The principal officer who asked whether the industry was intentionally kept in the dark all along may be forgiven.
Pension funds are now in the unenviable position that they are required to comply. Yet they will have to call on their service providers to assist while service providers will in most likelihood not be contractually obliged to meet this totally new requirement, and may in fact not be able to provide much of the required information due to the fact that their systems are not geared to capture, store and retrieve the information in the manner and format required. At best all parties involved will have to improvise and it may be expected that some of the information is not available or will be unreliable or inaccurate. How meaningful will such information be to the regulator?
Many pension funds have expressed their perception that the regulator is ruling autocratically, is exercising unreasonable pressure on their limited resources and is disregarding their concerns or suggestions. The concern was also expressed that funds are being systematically alienated through the approach of the regulator and that this will not be conducive to a spirit of mutual respect and co-operation.
Funds believe that the regulator does not appreciate the fact that the Namibian industry is totally dependent on layman trustees who are full time employees that are burdened with the additional responsibility of serving as trustee. Namibia has just over 100 registered funds with a membership of around 220,000. Eliminating the GIPF and umbrella funds, the average size of employer sponsored funds is around 500 members. For reference purposes it is relevant that the SA regulator takes the view that employer sponsored funds of less than 3,000 members are not viable on a stand-alone basis and should rather be accommodated in an umbrella fund. In terms of reporting though, even the SA regulator does not have such extensive requirements.
Ironically, NAMFISA seems intent on getting better insight on costs of managing pension funds and has given the impression that they may be concerned about these costs being too high.
To avoid alienation of pension funds and any confrontation, there is an urgent need that an independent and unbiased statutory mechanism is created under the Pension Funds Act that will objectively consider justified general concerns and objections of the pension funds industry and that has the authority to guide the regulator. Until such time, it will be purposeful for the Minister to play a role in introducing balance and fairness into the regulatory system.
Appealing decisions by Namfisa
Government notice no 160 provides an appeal procedure and form for persons wishing to appeal any ruling or decision of the chief executive officer of Namfisa made under the Namfisa Act. The new quarterly report is required in terms of the Pension Funds Act though, which does not provide for an appeal process. Funds should, however, consider using the procedure to appeal any other matter they may be aggrieved with which originated by Namfisa under the Namfisa Act,. It is to be noted that a person intending to appeal a decision of the chief executive officer in terms of the Namfisa Act must commence the appeal within 14 days of receipt of the notice.
Download the form here...
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.