Following concerns expressed by the public in the media about the state of pension funds, pension fund expert Marthinuz Fabianus, Managing Director of Retirement Fund Solutions (RFS) and a trustee of Benchmark Retirement Fund, has reassured members about the health of pension funds under RFS administration.
He says funds use a mix of investments that includes international and local asset classes such as investments in cash, money market instruments, bonds, shares and properties, etc. that are managed prudently to give the best possible returns and security to pension funds.
Fabianus goes on to say that although there was a major sell-off of shares on the local, regional and international stock exchanges during March as a result of panic caused by the Corona pandemic, markets recovered after about a month.
Fabianus stresses that although stock market investors who buy high-risk shares in the hopes of short-term gain may have lost value, pension fund membership typically lasts for thirty to forty years, and investments are managed to ensure very long-term growth, which continues in spite of short-term dips in the market.
To illustrate this point, he gives the example of the stock market crisis in 2007 and 2008. Other situations have emerged Fabianus points out, such as the ‘flash crash’ on the New York Stock Exchange during 2010 and turmoil in the Chinese stock markets. In spite of these brief challenges, long-term growth of pension funds has endured.
He goes on to say that the biggest loss of value is when people withdraw their pensions early. When they make early withdrawals from their pension funds, although they gain cash in the short term, they lose the value of future growth and the future safety net for retirement.
Talking about members who are about to retire, Fabianus adds that the best strategy is to try to delay drawing until growth has resumed. He goes on to say that Benchmark and RFS offer guidance and advice to members when they are about to retire.
Pension funds managed by RFS, and its fast-growing Benchmark Retirement Fund, Fabianus says, invest in low to moderate risk investments across a range of asset classes. The aim is to produce steady growth over decades to ensure financial wellness of their members upon retirement.
Funds, he says, are managed by a board of trustees, expertly administered and monitored by independent actuaries and independent auditors and there is a strong emphasis on governance, all under NAMFISA’s watchful eye as the regulator of pension funds.
He affirms that both RFS and Benchmark keep their members informed of the health of their investments with regular reports and newsletters. Pension funds must be accountable and transparent to their members.
“All will be well with pension funds,” Fabianus concludes.
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.