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NEWS & UPDATES:
  • Early Bird 2019-01

    The Early Bird fund performance indicators for January 2019 have been released. To get an early feel for what to expect of the month in terms of returns on your pension investment, the market gained 2.692% (Allshare Index ex div), ranging between 3.50% (Industrials) and -9.65% (Oil & Gas). The Rand strengthened by 7.66 % to the US$. Typical prudential managed pension portfolios returned between 3.530% (Coronation Balanced Plus Fund) and -1.382% (Allan Gray Balanced Fund) after fees.

  • Benchtest 2018-12

    In December 2018 the average prudential balanced portfolio returned 0.74% (November 2018: -1.73%). Top performer is Momentum (2.33%); while Namibia Asset Management (-0.56%) takes the bottom spot. For the 3-month period, Momentum takes top spot, outperforming the ‘average’ by roughly 1.74%. On the other end of the scale Namibia Asset Management underperformed the ‘average’ by 2.50%.

    Can you currently invest anywhere but in cash?

    In this month’s commentary we continue the discussion on the US repo rate and its implications for global financial markets and therefor on investment decisions. What is the risk of investing anywhere other than cash now and in which asset class can you otherwise invest? We have in last month’s commentary shown how closely correlated the SA interest rates and the JSE is to its US equivalents. Fiscal policy is driven primarily by the state of the economy which drives inflation and the tools used to drive policy are interest rates and the supply of money to the market. If the economy overheats inflation rises and this will result in the lifting of the Fedrate (or repo rate in SA). If the economy is moving into recession, the Fed will attempt to stimulate it by dropping its policy rate. Inflation will follow the decline in the economy.

    When the global financial crisis struck at the end of 2007, the US economy turned into recession. The Federal Reserve responded by lowering its policy rate from 5.25% in July 2007 to 0.25% in December 2008, and by flooding the market with money, in order to support the economy. GDP did recover rapidly out of negative territory up until the middle of 2009 to peak at just below 6% in quarter 2 of 2014. Since then it has declined steeply to steady at around 2% barring a blip taking it to just over 4% in the middle of 2018, probably the result of changes to US tax laws (refer graph 1).

    Read part 6 of the Monthly Review of Portfolio Performance to 31 December 2018 to find out what our investment views are.

  • Quarterly Reports 2018 Q3

  • Benchmark Actuarial Report 2017

    The Benchmark actuarial report for 2017 has been released and can be downloaded here.

  • 2017 Annual Report reveals growth of 27%

    As at 31 December 2016 the Benchmark Retirement Fund was the 4th largest fund in terms of assets and the 6th largest fund in terms of membership in Namibia, and that includes the ‘almighty’ GIPF!

    By 31 December 2017 the Fund’s assets grew by a further 27% reaching N$ 2.7 billion while its membership increased by 16% to just over 10,000 members. This is a remarkable achievement considering that Benchmark was only established at the beginning of 2000 and its growth can primarily be ascribed to word of mouth marketing. The Benchmark Retirement Fund is a unique fund of Namibian origin that caters for just about any need with regard to retirement provision, be it for employees of very small groups, SME’s and even large funds whose trustees do not want to be sucked into the maelstrom of the FIM Act and all its standards and regulations, for retirees, and for their minor and adult dependents.

  • Benchmark Financial Highlights 2017

    The Benchmark financial highlights for 2017 have been released and can be downloaded here.

  • The problem with pension backed housing loans

    Last month we informed participants in the Benchmark Retirement Fund that the trustees resolved to discontinue bank funded pension backed housing loans, also referred to as indirect loans. This decision was taken because of the risk the fund faces where a member has tax debts.

    The Benchmark Retirement Fund does not offer a housing loan arrangement as a business proposition but is willing to assist employers who want to offer a housing loan arrangement to its employees. As an alternative to indirect loans, the trustees resolved to rather facilitate a loan arrangement at the request of a participating employer by way of direct loans where the fund does not face the risk of being unable to recover a loan balance as the result of the borrower’s tax debts. In this instance the borrower effectively ‘calls up’ a portion of his/her retirement benefit and cedes that portion of the benefit to the fund. In the event of a default by the borrower, the fund can simply repay the loan with a portion of the member’s retirement benefit.

    Unfortunately, however, some of the requirements of the Pension Funds Act with regard to housing loans cannot be enforced, policed or managed by the fund and the fund cannot grant loans that place such obligations on the fund unless this responsibility is borne by the employer and backed by an indemnity by the employer to the fund. For example, the Benchmark Retirement Fund does not have the resources or expertise to inspect and evaluate any work done under a loan. Where a loan is requested to purchase a property in a proclaimed municipal area, it is not very onerous to ensure that the requirements of the Pension Funds Act have been met. There is a very formal process to transfer the property into the name of the borrower and this can easily be properly substantiated by way of deed of transfer or title deed. Paying the transferring attorney is also a secure process and does not expose the fund to the risk of misappropriation of loan funds.

    In conclusion, the Benchmark Retirement Fund is willing to facilitate a housing loan arrangement in respect of the purchase of property in proclaimed municipal areas. Any building loans or loans in unproclaimed areas will only be considered if the employer is prepared to enter into an agreement with the fund that obliges the employer to ensure that the requirements of the Pension Funds Act are met.

  • Selecting asset managers to diversify risk

    Trustees mostly understand that it is a risk to engage a single manager to manage their fund’s assets within a single investment mandate. But do they understand what risk or risks they face and which one will be reduced through the appointment of more than one manager and what is the correct number of managers to use?

    Read more...

  • The problem with pension backed housing loans

    The trustees of the Benchmark Retirement Fund recently resolved to no longer grant pension backed housing loans as these pose a risk to the Fund.

    In terms of the Income Tax Act, the Receiver of Revenue has a first right to claim against any pay-out from any approved retirement fund. Where an employer entered into an agreement with the Fund and a Bank to offer pension backed housing loans to its employees the employer and the fund are contractually bound to redeem any outstanding housing loan balance in the event of the termination of fund membership of a person who had taken up a pension backed housing loan from the Bank. In such an instance, the administrator of the Fund is required to obtain a tax directive from Inland Revenue prior to paying out any portion of the member’s benefit if the total benefit is more than N$ 40,000. Any amount to be paid to the Bank constitutes a termination benefit and therefore requires the administrator to obtain a tax directive. Where the member owes Inland Revenue tax, the tax in excess of the net after tax benefit payable to the member, remains due to the Bank in terms of the agreement between Fund, Bank and employer. Attempts would now have to be made to recover this money from the former member, between the Fund and the employer.

    The situation with direct housing loans is quite different. In such cases the member borrows against his own interest in the fund. The maximum amount that is available to cover any tax debt of the member is the net after tax benefit of the member after the outstanding loan balance has been ‘offset’. Neither the Fund nor the employer faces any risk of recovering any remaining loan balance from the member.

    The Fund will in future only grant direct housing loans where the member borrows against his own benefit in the fund. In the next newsletter I will expand on the conditions for granting direct housing loans.

  • Fund membership must be a condition of employment

    We wish to draw the attention of employers who participate in the Benchmark Retirement Fund, to the fact that it is a requirement that all new employees joining the employer after the date the employer joined the fund, must be enrolled as members of the fund. This is not optional and employers affording new employees the choice whether or not to become a member are transgressing the rules, the agreement with the fund and the requirements of the Income Tax Act.

    Employers who engage in such practice firstly may find that the Receiver of Revenue cancels the tax approval of the employer’s pension fund. In terms of the Income Tax Act, membership of a fund must be obligatory in order for employee contributions being allowed as a deduction against the employee’s taxable income. Cancellation of tax approval will mean that the contributions that employees have made to the fund will be disallowed. In other words the employees that participate will be punished for the transgression by those the employer afforded the choice to join and who chose not to join.

    From the fund’s and the insurer’s perspective it is also important that membership is a condition of employment. This serves to ensure that the employees cannot apply anti-selection. In other words healthy employees are more likely not to join while those who know to have a health impediment are more likely to join. As the result the fund may end up with the poor risks undermining the principles of group underwriting. To protect the fund against such practices, the trustees have the powers to terminate membership of an employer.

  • Benchmark Unclaimed Benefits

    2017-11-07

    A number of members of employer groups have unclaimed benefits in the Benchmark Retirement Funds. They were employees of African Marketing, African Packaging, Benthin African Agencies, Blood Transfusion Services, Brandberg Construction, Diesel Electric, Gondwana Collection, Hartlief Corporation, Namibia Engineering Corporation, Namibia Red Cross, Nampharm, NNF, Novel Motor Company, Ohorongo Cement, Plastic Packaging, Polyoak Packaging, Scania Namibia, Transworld Cargo, Tunacor, Tyrepro Namibia and Wilderness Safaris. If your name appears on this list, please make contact with the person listed alongside your name. If you know a person on this list, please inform her or him.

  • Default Portfolio Change

    The Board of Trustees of Benchmark Retirement Fund instructed the Fund’s investment consultant, NMG Consultants and Actuaries (Namibia) (Pty) Ltd, to determine whether the Fund’s default portfolio was still suitably constructed as a moderate-low risk portfolio. After extensive analysis and consultation the Board of Trustees resolved to change the default investment portfolio to a combination of the Allan Gray Namibia Balanced portfolio, Prudential Namibia Inflation Plus and Sanlam Namibia Inflation Linked from the previous combination of Allan Gray Namibia Balanced and Prudential Namibia Inflation Plus.

    The reasoning for the change in the default investment portfolio was that:

    • the Sanlam Inflation Linked Fund showed to better protect capital in market down-turns compared to Prudential Namibia Inflation Plus,
    • the 3 portfolios produce a more appropriate risk/return profile and therefore the member should experience less volatility and fewer negative periods also referred to as portfolio drawdown, and
    • the portfolio has been re-aligned to the objective of the portfolio.

    The re-balancing of the investment portfolio was done in mid-October 2017.

  • What is your investment strategy?

    What is your investment strategy?

    If you followed investment markets more generally and latest investment returns of pension fund portfolios more specifically, you will be forgiven for your concern about the seemingly poor short-term investment returns of your Benchmark Default portfolio or any other portfolio you may have chosen to invest in, for that matter. However before you go off on a tangent because of these disappointing short-term results, you must ask yourself whether you have defined your investment strategy? What is your investment horizon? If you want positive returns for the next 6 to 12 months, do not invest in prudential balanced portfolios but rather in cash!

  • Benchmark breaches the N$ 2 billion mark

    Benchmark breaches the N$ 2 billion mark

    The Benchmark Retirement Fund today is by our estimates the 4th largest fund in Namibia in terms of membership and 6th largest fund in terms of total assets, having achieved this milestone over a mere 16 years since it was established. Benchmark today has 9,000 members and assets exceeding N$ 2 billion.

    Read the full report here...

  • Seven habits of financially healthy retirees

    Seven habits of financially healthy retirees

    Sanlam has provided a guide to the seven good habits of financially healthy retirees. How do you measure up? Click here for the bigger picture...

  • Why preserve your retirement capital?

    Why preserve your retirement capital?

    How you manage your pension fund when you resign will decide your wealth. You may withdraw it, but is that the best choice for your future?

  • Benchmark retirement capital preservation

    Benchmark retirement capital preservation

    When you change jobs, stop working or are retrenched and have to withdraw from the retirement fund you have been contributing to, you can preserve your fund credit in the Benchmark Retirement Fund.

    By transferring your fund credit to the Benchmark Retirement Fund you will preserve it for retirement and will be able to grow it with investment returns.

    Preserving your fund credit is imperative to ensure that you reach your retirement objectives and is a tax efficient way to exit your current retirement fund.

  • Benchmark living annuities

    Benchmark living annuities

    When reaching retirement age (depending on the rules of your current retirement fund), you can invest your fund credit in an investment linked living annuity in the Benchmark Retirement Fund to receive your monthly pension.

    You can join Benchmark Retirement Fund on retirement. You do not already have to be a member of the Fund at that stage.

    The monthly pension can be chosen by you, taking the requirements of the Income Tax Act into account. The monthly pension will be a function of the amount of capital available, the investment returns earned and the period for which you require a monthly pension.

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Benchmark Retirement Fund

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