|In this newsletter:
Benchtest 02.2018, How the regulator can save costs for the consumer, prospects for the US equity market and its impact, RF.R.5.11 examined, check the validity of your beneficiary nomination form and more...
Important notes and reminders
The following regulations and standards were issued and covered in the process:
The above regulations were covered in Benchtest 02.2018 newsletter issued in February.
In Benchtest 01.2018 we addressed RF.R.5.3, RF.R.5.7 and RF.R.5.8 and will place focus on the remaining standards in the next few newsletters.
RF.S.5.11 Alternative forms for the payment of pensions for the purposes of defined contributions funds
The following documents can be further adapted with the assistance of RFS.
The Benchmark Retirement Fund
Flagship of umbrella funds in Namibia
By Paul-Gordon, /Guidao-Oab, Benchmark Product Manager
Your employees’ beneficiary nomination forms may be invalid
Employers participating in the Benchmark Retirement Fund will be aware that employees should complete a beneficiary nomination form to assist the trustees of the fund to allocate the lump sum benefit that is payable upon the death of a member. This form should be reviewed at least annually as the member’s status with regard to dependants and nominees may change from time to time and such changes should be taken into account when reviewing the beneficiary nomination form.
Where an employer previously participated in an umbrella fund and subsequently transferred its retirement funding arrangement to another umbrella fund or where a stand-alone fund moved into an umbrella fund, the employees may have submitted beneficiary nomination forms to the original fund but may not have submitted new beneficiary nomination forms to the subsequent fund.
Employers should take note that the forms submitted to the original fund cannot be considered by the trustees of the subsequent fund as they do not constitute a valid beneficiary nomination form for the subsequent fund.
Section 37C (1) (b) states - “If the fund does not become aware of or cannot trace any dependant of the member within twelve months of the death of the member, and the member has designated in writing to the fund a nominee who is not a dependant of the member to receive the benefit or such portion of the benefit as is specified by the member in writing to the fund, the benefit or such portion of the benefit shall be paid to such nominee…” The Key words here are ‘in writing’ and ‘to the fund’. A beneficiary nomination form typically reflects the name of the fund in respect of which it is completed by the member and this will be in writing. Such form of the original fund clearly does not meet the requirements of section 37C (1) (b) with regard to the subsequent fund.
Employers who moved from another retirement arrangement to the Benchmark Retirement Fund are urgently requested to arrange for all their employees to complete a new Benchmark beneficiary nomination form and to submit this to RFS as soon as possible.
News from RFS
Victoria Nashongwa joined us at the beginning of 2002. She is responsible for a team of administrators providing fund administration services to our private fund clients. She has previously been in the employ of other fund administrators since March 1997, and can thus call on extensive, relevant experience. As Insurance Institute of South Africa licentiate, she holds the Intermediate Certificate.
RFS reappointed to administer Namdeb Provident Fund
RFS is extremely proud and pleased to announce that the Namdeb Provident Fund appointed RFS to administer the fund for another term of 3 years following a previous extension of 3 years!
In all humbleness, the message is self-evident and we look forward to serve this fund beyond its expectations over the next term of our appointment.
We would like to express our sincere gratitude to the board of trustees of the fund for their trust and confidence in our capabilities as fund administrators to their fund!
The RFS / SKW youth soccer tournament 2018
RFS once again sponsored the RFS / SKW youth soccer tournament that took place at SKW Soccer fields from 9 to 11 March. The tournament was played in the age groups u/7 to u/17.
Above, The winning U9 team - SKW!
Above, Kai Friedrich, director responsible for sponsoring the annual SKW Youth Soccer Tournament, with a proud winner of the U9 group shows off GREAT support from RFS.
RFS social committee reaches out to Môreson Centre
RFS social committee visited the Môreson Centre at its Independence Day celebrations with truly Namibia inspired cupcakes and face painting.
Rudigar van Wyk (left) and Riduwone Farmer (right) handed over the colourful Namibia flag made of cupcakes.
During the visit, members of the social team had time to meet some of the learners and teachers.
The depth of expertise of the RFS team
Here is a summary of the qualifications and experience of our staff brought to bear on each client we administer on a daily basis:
Note, in our 18 year history of our 67 staff:
Notes of the industry meeting of 19 March 2018
NAMFISA hosted another pension funds industry meeting at Safari Hotel and Conference Centre, inviting only trustees and principal officers. Once again attendance was disappointing
As surmised previously, there is evidently a significant disconnect between what the regulator expects of the industry and what the industry can carry. In most instances trustees are employed full time and are assigned to their pension fund on an unpaid basis by the employer at its cost. These trustees are typically in senior management positions and often simply do not have the capacity to attend industry meetings.
Here are a few salient points from the notes:
Download the NAMFISA presentation here...
Determination in L Kirsten vs Allan Gray
This matter deals with the Adjudicator determination in the case L Kirsten (complainant) vs Allan Gray Retirement Annuity Fund (first respondent) and Allan Gray Investments (second respondent)
The salient facts and points of this matter were as follows:
(for stakeholders of the retirement funds industry)
How to retire comfortably
We all know that the majority of employees cash out on their pension fund benefit when they resign from their employer for alternative employment. In the final analysis this will lead to these employees having to rely on an insufficient income post retirement. If your financial planning aims to provide an income post retirement of 75% of your pre-retirement income, you should ensure that you have accumulated around two times your annual salary at age 30 and around five times your annual salary at age 40. If you have accumulated these amounts, you are on track, if you have not you have a problem that you need to address!
Here is some good advice of what you should do to ensure that you will retire comfortably.
Regulation fuels drastic reduction in stand-alone retirement funds
The following article is based on the South African legal and regulatory environments. However, Namibia is following suit and we will undoubtedly have the same experiences here.
“There has been a significant reduction in the number of stand-alone retirement funds over the last six years as regulation increasingly sees these funds being swallowed by larger umbrella funds.
An analysis of data from the Financial Services Board (FSB) shows that the number of active stand-alone funds (including industry umbrella funds) have dropped from 1 439 in March 2012 to 982 by February 2018. The number of commercial umbrella funds has been fairly static at about 200 over the period.
To a large extent, this has been the result of increased regulation – including the additional costs associated with Regulation 28 reporting and the introduction of default regulations. Defaults are automatic choices made on behalf of retirement fund members who do not exercise their choices in a given situation. The latter is an effort by government to improve the retirement fund outcomes for members by ensuring that they get good value for their savings and maintain their standard of living in retirement…”
Read the full article by Ingé Lamprecht in Moneyweb of 7 March 2018, here...
10 facts about fund managers you should know
“Glacier by Sanlam has released an analysis of the South African asset management industry that has uncovered some fascinating statistics about investment teams and how they operate. The survey covered 146 funds across the South African multi-asset low-equity, medium-equity, high-equity, flexible, and general-equity categories.
The findings should certainly give asset managers themselves as well as investors and financial advisors something to think about:
(for investors and business)
How to avoid running your child’s life
“We’re often asked is “what should my child study”? Parents obviously have a particular set of concerns about the future related to their children, but there is a danger that overachieving (or anxious) parents can put too much stress on their children.
The evidence of this is seen everywhere in the world’s schooling systems, as more young people than ever before are taking antidepressants and going to therapy. I came across a superb article in Fast Company magazine a while back that every parent should read: How overachieving parents can avoid pressuring their kids.
It suggests four things for parents to consider:
It’s fine to have ambitions for our children, and to teach them to have ambition for themselves too. But let’s not forget that childhood should also be about play, having fun, developing nurturing relationships and exploring the world.
Our future – and the future of our children – depends on them being a lot more resilient, flexible, open to on-going learning, more adaptable to change and more creative than we were ever required to be. The way to develop these character traits is not the way our core skills were developed. Parents need to change their view of what their focus should be, and be open to new approaches to raising their children.”
‘Mother of all yield shocks is about to crush stocks’
“David Stockman, the so-called “Father of Reaganomics,” hasn’t been shy — or close to right — about his frantically bearish calls in recent years. Just last summer, he warned of a “horrendous storm” that could take the S&P 500 index all the way down to 1,600. From there, he took it up a notch in September, saying stocks are headed for a retreat of up to 70%. Well, it’s still up at 2,700. But the market’s volatile behavior of late has emboldened some bears to refresh and even ramp up their doomsday scenarios. Stockman is one of them. “There is not a snowball’s chance in the hot place that the mother of all yield shocks can be avoided,” Stockman wrote on his blog this week. He explains that we’re in a uniquely dangerous position, one that really couldn’t have even happened under previous administrations…”
Read the full article by Shawn Langlois in MarketWatch of 21 March 2018 here...
How tax reforms will net the US big returns
“Under the previous system, U.S. corporations had incentives to hold their spare cash offshore in tax havens. A high corporate tax rate, coupled with an absence of time limits as to when companies had to repatriate their foreign earnings for taxation purposes, resulted in firms accruing ever larger piles of cash in friendly offshore jurisdictions that were willing to offer favorable terms in exchange for hosting the American giants. The realities of the modern economy greatly impacted this trend. Technology firms whose value largely lies in intangible assets such as intellectual property (iPhone software, for example) found they could choose where they booked their profits because the product was not physical, making its location harder to pinpoint. Accordingly, they often opted to park their profits in tax-efficient locations. The upshot has been the emergence of giant "cashbergs" in offshore havens. One study found that 63 percent of U.S. offshore earnings were reported in six jurisdictions – the Netherlands, Bermuda, Luxembourg, Ireland, Singapore and Switzerland…”
Read the full article by Marc Fleming-Williams in ‘Stratfor Worldview’ of 20 March 2018 here...
Cryptocurrency will give you true freedom
This was the message of Steve Bannon, Donald Trump’s former chief strategist, to a European audience recently.
Bannon believes that Cryptos and the blockchain will “empower [the populist] movement, empower companies, [and] empower governments to get away from the central banks that debase your currency and makes slave wages,” he said. “We take control of the central banks away. That will give us the power again…” He accused governments, central banks, and tech companies of infringing on the rights of ordinary citizens and exploiting them for their own purposes.
Read the full article by Shawn Langlois in MarketWatch of 8 March 2018 here...
Blackboard wisdom at a filling station
A filling station has become quite a landmark in Gauteng, South Africa, with its daily #PetrolPumpWisdom, which are uplifting quotes written on a chalkboard. Some motorists say they deliberately travel this road just to read the quote which brightens their day. Here's one: