Contributed by Carmen Diehl
Senior Manager: Fund Accounting and Compliance
Background and status of FIMA subordinate legislation:
NAMFISA invited its regulated industry impacted by the implementation of the Financial Institutions and Markets Act No 2 of 2021 (‘FIMA’) (‘Industry’) to comment on FIMA subordinate legislation.
NAMFISA uploaded the revised standards and regulations incorporating NAMFISA responses on Industry representations on the NAMFISA website.
Since the changes to subordinate legislation are extensive, we will bring these to you in the next few newsletters. This is the second contribution. The previous one appeared in Benchtest 02.2023.
Main changes identified that affect administrators and funds:
| Regulation / standard |
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Change |
- RF.S.5.2
Requirement for an investigation by and the report of a valuator on the financial position of a fund and the form of a summary of such report
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- Addition of clause 6 which requires: “A report referred to in section 272(3) of the Act (Rule amendment that affects the financial position of the fund) must, in addition to the requirements of clause 4 or 5 as applicable, include an assessment of the impact of any amended, rescinded or additional rule on the soundness of the financial position of the fund.”
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- RF.S.5.3
Minimum information that must be furnished to a fund by an employer with respect to the payment of contributions
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- Clause 3(a): Contribution schedules should contain the full names instead of the initials of each member in addition to the previous requirements.
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- RF.S.5.4
Requirements for rules of a fund and any amendment of such rules
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- Clause 3(i) of the previous version required the rules of the fund to provide for the nature and extent of retirement benefits.
- The revised standard requires the rules to also provide for “the conditions under which any member or other person may become entitled to any retirement benefit”.
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- RF.S.5.4
Requirements for rules of a fund and any amendment of such rules
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- Clause 5 was amended to state that all funds must amend their rules to comply with this standard within 12 months (previously 6 months) of the date on which this standard comes into effect.
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- RF.S.5.7
Minimum benefits that a fund must provide to its members
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- Clause 15 of the previous version required that the retirement benefit increase of retired members of defined benefit funds must be at least equal to inflation.
- The revised version adds that the above requirement should be aimed for, subject to the affordability of the fund.
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- RF.S.5.9
Compulsory beneficiary nomination forms
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- Clause 3: A No Change to Beneficiary Nomination Form indicating that no changes are made to the latest existing beneficiary nomination form completed by the member was added.
- Clause 4: Funds are therefore required to send out both forms to the members annually.
- Either one of the forms must be returned by the member on or before 30 January each year.
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- RF.S.5.13
Requirements of a communications strategy to be adopted by the board of a fund to ensure that adequate and appropriate information is communicated to members, employers and sponsors
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- “Qualified financial institution” and “qualified retirement income provider” replaced with “retirement income provider”
- Definition of “qualified financial institution”: means a financial institution registered under the Act that complies with the requirements of Regulation No. RF.R.5.10 The preservation of retirement benefits
- Definition of “retirement income provider”: means a registered insurer or other registered retirement fund.
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- RF.S.5.15
Requirements for report of the board to NAMFISA
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- Clause 3(2) was added in the revised version, requiring the management report findings by the auditors of the fund, referred to in clause 3(1)(b)(v), to be submitted separately to NAMFISA within three months of the fund’s financial year-end.
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- RF.S.5.15
Requirements for report of the board to NAMFISA
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- Clause 3(1)(b)(vi) “a brief analysis of the fund’s gains and losses during the year under review” no longer required to be disclosed in the annual report to NAMFISA.
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- RF.S.5.17
Categories of persons having an interest in the compliance of a fund with the provisions of section 270(7) (Payment of contributions)
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- Requirement to send the report to auditor and valuator of the fund was removed
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Editor’s comment
With the changes and new standards issued, the number of compliance requirements we identified increased from just over 600 to 758! It goes beyond anyone’s imagination and substantiates the fact that FIMA does not constitute a move from compliance to risk-based supervision but rather the opposite!
Something has gone seriously wrong with this monstrous new law. We should stand back now and ask ourselves “Is this what Namibia can afford and needs and what we want?” I fear that we have gone so far down the path and have invested so much energy and resources that we will rather close our eyes and carry on, whatever the consequences may be!
Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. RFS (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 RFS.
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