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Benchtest 12.2017, rather manage your own investments, SSC benefits and tax and more...
Important notes and reminders
The following documents can be further adapted with the assistance of RFS.
The Benchmark Retirement Fund
RFS in action
Compliance management aims to ascertain that all employees or RFS adhere to the requirements of laws, industry and organisational standards and codes, principles of good governance and accepted community and ethical standards. This process entails the establishment of compliance procedures, the identification of laws of relevance to RFS’ operations, the execution of regular compliance reviews and the maintenance of a compliance register. These laws prominently include the Pension Funds Act, the Income Tax Act, the Financial Intelligence Act, the NAMFISA Act as well as a number of other laws. Each law is assigned to an executive director for the purpose of monitoring on-going compliance by RFS.
News from RFS
Hannes van Tonder heads up our Benchmark Retirement Fund administration services, systems and procedures and in-house umbrella fund administration training. He can call on 20 years pension fund administration experience. He holds a B Com degree from Unam and an honours degree from Unisa. Furthermore, he obtained an IISA Licentiate (Retirement Fund Management) conferred by the Insurance Institute of South Africa.
New staff join our permanent staff complement
Riduwone Farmer joined our permanent staff complement on 1 January 2018. He was born at Walvis Bay and matriculated at Jan Mohr Secondary School. Riduwone is well-known in the retirement funds industry. He started his career at UPA in 1998 which was later acquired by Alexander Forbes. He gained experience in almost all administration related fields over a period of 15 years with Alexander Forbes. He resigned from AFFS in May 2013 to join his wife who had accepted a diplomatic posting to Lusaka. Riduwone enrolled for a Bachelor Degree in Business Administration and wrote his last exams at the end of last year, currently awaiting the results.
We extend a hearty welcome to Riduwone and his family to the RFS family and look forward to him serving his Benchmark client with passion, diligence and conviction for many years to come.
Information and correspondence to take note of
Duplication of NAMFISA levies on certain investments
In a previous newsletter, we pointed out that the regulation in terms of which a new NAMFISA levy structure was to be introduced with effect from 1 November 2017, has resulted in a questionable layering of levies on the same assets and has created uneven playing fields depending on what investment vehicles are employed to invest a fund’s assets. The most inequitable layering appears to be where a fund invests in an insurance policy. These assets are levied in the fund. The monthly cash flows into the investment policy are then levied as an insurance policy premium. The insurer who manages these assets is then once again levied on the same assets. If these assets were managed either in a unit trust or in a segregated portfolio, they would ‘only’ be subjected to the fund levy and the levy applicable to asset managers or to unit trust management companies as the case may be.
We have taken this up with all insurers and enquired what they intend to do about this patently inequitable treatment of assets invested through an insurance company.
One insurance company responded as follows:
“We take note of your concern regarding the implication of fees being levied twice. We have been in discussions with the Regulator for quite some time, and the below concern has been discussed at various forums within the company.
The Regulator is of the opinion that the act is very clear on this matter.
At this point we are seeking for a solution to this problem by either seeking for exemption or by looking at ways to restructure our products, but careful consideration needs to be given at all the different levels to account for the full impact at client level.
Unfortunately this is quite a tedious process as we need to constantly engage with the Regulator on this matter as well. T did meet with them again yesterday and the discussions are being held at the highest level with the Regulator as a matter of urgency.”
Another insurer responded as follows:
“A correspondence on behalf of our company requesting that in instances wherein pension/retirement funds invest through insurance policies, such assets be exempted from the long term insurance policies and it be levied as pension/retirement funds only, thereby negating the double levy impacting upon pension/retirement fund members has been drafted and will be sent to NAMFISA this week.
Our company is of the opinion that failing this, pension funds, provident funds, preservation funds and retirement annuity funds will be double levied, in the first instance as part of gross written premiums in the life company and in the second instance, in their own capacity. Prior to the legislative amendment the life company was permitted to deduct the assets of the pension funds, provident funds, preservation funds and retirement annuity funds, as these assets would already have been levied in their singular capacity.”
News from the market
Establishment of Namibian Revenue Agency
The Namibia Revenue Agency Act, Act 12 of 2017 (“the NRA Act”) was gazetted on 12 December 2017. The NRA Act provides for the establishment of the Namibia Revenue Agency (“NRA”), the powers, functions and management of the NRA. The NRA will be headed by a Commissioner. The Minister of Finance appoints the Commissioner for a period of 5 years. The Commissioner may not be appointed for more than 2 terms.
The NRA Act will only become effective on a date determined by the Minister of Finance by notice in Government Gazette.
Read EY Namibia Tax bulletin 1/2018 here...
(for stakeholders of the retirement funds industry)
A retirement rule of thumb is not for everyone
“A rule of thumb widely used in the retirement industry suggests that you should aim to save enough money to earn a gross retirement income equal to 75% of your final gross income immediately prior to retirement.
While working, a person’s gross income is used for consumption, to save (mostly for retirement) and to pay tax. Targeting an income replacement ratio of 75% in retirement (instead of 100%) is premised on the assumption that a retired individual will stop saving for retirement and pay less tax. However, this is a fairly crude target that may not be appropriate for everyone and may be difficult to understand… Using a consumption replacement ratio (consumption in retirement as a percentage of consumption prior to retirement) is a better measure of financial readiness for retirement. It is individualised for the person, takes into account how much they are actually saving and how much tax they are actually paying instead of crudely assuming that everyone is the same, she says….”
Read the full article by Ingé Lamprecht in Moneyweb of 21 November 2017, here...
Getting the most out of annuities
“Anyone who has saved money in a pension fund or a retirement annuity has to make a decision when they reach retirement age. At least two thirds of the money they have saved has to be used to secure themselves a monthly income.
This must be through a living annuity, or a guaranteed annuity. However, it’s important for investors to understand that they are not restricted to choosing one or the other. It is possible, and even often advisable, to use both.
As an individual, your lowest-risk annuity choice is always buying a guaranteed annuity that starts off providing you with the amount of money you need and escalates every year with inflation. Then, no matter how long you live, you should always meet your income objectives.
But while that is a great idea, some people can’t afford that from day one, because the guaranteed income that they can purchase doesn’t meet their needs…”
Read the full article by Patrick Cairns in Moneyweb of 7 November 2017, here...
The no 1 financial fear of rich people should have you seriously concerned
“Even the richest Americans are worried about having enough for retirement.
51% of affluent investors — defined as those who have total investable assets of $500,000 or more — say they are concerned about being financially secure in retirement.
That’s according to a survey from Personal Capital in conjunction with ORC International, which asked 1,000 affluent Americans what concerns they have about financial planning…”
Read the full article by Sally French in MarketWatch of 20 December 2017, here…
(for investors and business)
How I paid off my house in under 5 years
First off, however, accept and understand that paying off a mountain of credit card debt or a car or even a house in an aggressive timeframe is not impossible! This has been done before (and there are no penalties for doing it)... To many, the mechanics of how to pay extra are a mystery. This really ought not to be. Simply transfer/pay extra money into your loan accounts as if you were moving money between a current account and a credit card. It is really that simple...
Adjust your lifestyle (downwards!)
When I decided to attempt to be debt-free by age 35, the most important philosophical change I had to make in life was to live below my means. This ought to be the case in all your spending, but is especially true in the two largest purchases you’ll likely ever make: your car and your house. Very simply, buy below what you can afford...
Get a grip on your spending
Budgeting is something I learnt before trying to prove that I could pull this off. But, the detail and discipline had to be taken to another level entirely.
First, track every cent that comes into or leaves your bank accounts every month. Categorise this into useful buckets such as food, fuel/transport, discretionary, etc...
Get rid of ‘bad’ debt
When you’re tackling a large amount of long-term debt, short-term debt gets in the way. It is not logical to try pay off a bond while juggling car repayments, credit card bills and other loans...
Save, save, save
Figure out how much extra you’re able to put into your bond every month, and use this as a minimum target. Don’t stop there. Set an aggressive one as well...
Put any unexpected windfalls (the obvious one is an annual bonus) into your bond and try hard not to adjust ‘into’ your annual increase...
Once it’s done
Here’s the kicker: once your house is paid off – much like your car – forgo the temptation to upgrade thereafter. In fact, make a deliberate decision to not move into something bigger and better once your property is paid off. I’m finding this harder than expected.
Rather, use the runway over the next five to ten years to build some wealth...
Read the full article by Hilton Tarrant in Moneyweb of 24 November 2017, here...
Three powerful public speaking lessons from ‘Dutch directness’
“If you’re someone who struggles with confidence and authority in your speaking, then Dutch directness is your friend. Here are three important lessons to learn that'll turn directness to your advantage.
Be honest… Whether in a board room or on stage giving a talk, instead of cushioning facts and hiding problems, tell them what the problem is, and then show the path and solution ahead. It will earn you tremendous trust.
Embrace giving feedback… Feedback done wrong can be costly for the company- negative relationship with managers is one of the biggest reasons for promising employees leaving their jobs…Be factual, don’t get personal… By being factual and away from personal attacks, you'll be able to establish yourself as a leader whose words command respect.
Be light-hearted… Note- don't go overboard with pulling people's leg and becoming rude, that destroys relationships. Measure your words well...”
Read the full article by Sangbreeta Moitra in LinkedIn of 8 January 2017, here...
The 8 signs of a bad leader
“It's an interesting conundrum. Say you're a manager, a senior-level executive, or a human resources employee; your job is to be a leader, yes, but also to pick out leaders, to select who will be promoted, given extra responsibility, head up a project or team. How do you know who will make a great leader in a given circumstance?
There are loads of articles floating around about attributes that make great leaders great, but what makes a poor leader? We can all pick them out after the fact (hindsight is 20/20 after all), but what traits set these people apart even before they assume a leadership role?
Any one or more of the following traits would be a red flag that a person might not be ready for a leadership position:”
From Marketing Insight.
Did you ever wonder why?
WHY: Why do men's clothes have buttons on the right while women's clothes have buttons on the left?
BECAUSE: When buttons were invented, they were very expensive and worn primarily by the rich. Since most people are right-handed, it is easier to push buttons on the right through holes on the left. Because wealthy women were dressed by maids, dressmakers put the buttons on the maid's right! And that's where women's buttons have remained since.