|In this newsletter:
Benchtest 03.2017, NAMFISA levies to increase 2,400%, trustees and corporate governance and more...
Important notes and reminders
Are your service providers registered?
The information is available on the NAMFISA website although it would appear that the information is not fully up-to-date. For your convenience find the lists here...
Trustees are required to manage the affairs of their fund in the best interests of their members. As a trustee there are many areas one needs to consider and measure your fund to understand whether you are doing good, bad or indifferent. Commonly for example, trustees measure the performance of the investments of the fund. The investments being the biggest asset of the fund, the performance can fortunately be measured against readily available benchmarks and trustees will at all times know how they are doing and when they may expect to face head winds from their members if they are not doing that well. So that area is covered pretty well provided trustees have applied care, skill and good faith in appointing the asset managers they did appoint.
Pension fund governance - a toolbox for trustees
The following documents can be further adapted with the assistance of RFS.
Be in touch with members of your fund!
Kai Friedrich's Administration Forum
News from RFS
The RFS / SKW youth soccer tournament 2017
RFS once again sponsored the RFS / SKW youth soccer tournament that took place at SKW Soccer fields from 21 to 24 April.
Above: Kai Friedrich hands the RFS sponsorship to Mr Vincent Molzahn, Chairman of the SKW soccer division.
Above: Kai Friedrich hands the trophy to the captain of Kaizen Football Academy youth team, winners in the under-17 category.
Above: the winning under-17 team of the Kaizen Football Academy.
News from NAMFISA
Industry meeting of 13 March 2017
You should take the trouble to read the notes of the latest pension funds industry meeting held on 13 March 2017 for insight into the goings on at NAMFISA.
Our staff attended this meeting and prepared notes for the convenience of clients and readers that you can download here...
(for stakeholders of the retirement funds industry)
Review of pension fund trustee decision
This case (Maphoyisa v Municipal Gratuity Fund and Sanlam Life Insurance Limited or Maphoyisa case) is about the prescription of a claim of a minor beneficiary after reaching age of a majority. In SA age of majority was changed from 21 to 18. The same is due to happen in Namibia. The Child Care & Protection Act was promulgated in Gazette 5744 of 29 March 2015 and sets the age of majority at age 18. At this stage the Act has not commenced yet.
A complaint was lodged by a person who claimed to have been dependent on the deceased and should have been considered for an allocation of a portion of the death benefit. The Fund did not deal with the merits of the complaint. Instead the Fund relied on the Prescription Act 1969 (which also applies in Namibia) which stipulates that if the creditor is a minor the period of prescription will not be completed before a year has lapsed after the day he ceases to be a minor. The Fund argued that the complainant was out of time to lodge a complaint as his claim prescribed on 10 November 2016 (1 year after he turned 18) and the complainant only lodged the complaint on 22 November 2016.
The PFA then referred to a Supreme Court of Appeal finding which essentially provided that legislation cannot have retrospective effect, unless the new legislation expressly states it applies retrospectively (where it impairs a vested right acquired under existing legislation).
In light of this, the PFA reached the conclusion that since the Children’s Act did not state it applied retrospectively and the new majority age would impair the rights of the complainant, the majority age of 21 must apply to the complainant. As such the complainant’s claim had not prescribed as he was only 18 years old when the complaint was lodged. His claim would only prescribe on 10 November 2019, one year after he turns 21.
The trustees’ decision that was taken 12 years before the complaint was lodged, was set aside and the trustees were ordered to re-apply their discretion.
Presumably by now the moneys would have been distributed so if the trustees then arrive at a different allocation, any underpayments must be made good while the fund would sit with the challenge whether or not to recover any overpayments.
Read the full article by Gennel Chettiar of Norton Rose Fullbright in Insurances Gateway of 21 March 2017, here...
What to do when the market drops
“Often when the market dips, even slightly, people’s first reaction is to act hastily, this can only be to the detriment of your investments. While the ultimate goal of investing is to realise growth on investments, there’s an element of risk that is innate to investing, especially in stock markets. It is therefore important for investors to understand the market risk to ensure an appropriate response in the event of a temporary drop in the market.”
In order to see your investment grow, follow this advice:
Investment choices: cash or balanced fund
“The answer is: it depends , but probably a balanced fund.”
Here is the answer to why it depends, derived from a study carried out by the author over a period including the market crash in 2008/9.
“...in the worst case scenario an investor into a balanced fund could have experienced a drawdown of 20% over a period of nearly 1.5 years, still been negative after nearly 2.5 years, and only overtaken the worst case experience right at the end of the 5 year period! More realistically, the average fund investor would have generated a return some 4% pa better than the average cash investor, despite investing through the 2008/9 crash! It is also evident that an investor with a shorter investment horizon (i.e. 1 year or 3 years) should probably be investing into a lower risk option – potentially even cash!”
Read the article by Mike Browne of Seed Investments in Sharenet of 20 April 2017, here...
A blueprint for financial survival
The preceding two articles essentially cover the same topic namely how South Africans should go about managing their investments under current circumstances, but proposes much more radical answers. Magnus Heystek, a well-known commentator and investment strategist at Brenthurst Wealth takes a very dim view on SA’s economic prospects and based on these makes some radical suggestions as to what you should do.
Read the interesting article in Moneyweb of 24 April 2017 here....
(for investors and business)
Namibians are the 3rd wealthiest people in Africa
An interesting finding, and if you are interested to read more about it, read the short note in IJG Daily 240117, here...
Bonuses at Amazon for not calling sick
Employers undoubtedly sometimes wonder about the legitimacy of doctors’ certificates for sick leave of their staff. From personal experience doctors normally prescribe some medicines and that’s it. Others enquire whether you want to be booked off.
Amazon in Germany has introduced a controversial bonus scheme paying between 6% and 10% of the employee’s salary for using few paid sick days. It has also designed the scheme to apply peer pressure on employees not to call sick. Of course one must be aware that this coin too has two sides that one should consider. In cases of infectious diseases one probably would not want the employee to call for duty.
Read the interesting short article in Quartz Media, here...
“Retired is being twice tired, I've thought. First tired of working. Then tired of not.”
~ Richard Armour