14 March 2023

ISSUED TO:

• RFS Fund Administrators’(Pty) Ltd retirement fund clients and members
• Media houses
• Benchmark Retirement Fund clients and members

This statement is issued in response to false claims, misinformation, propaganda, and malicious and intentional misguided statements aimed at tarnishing the good name of the Benchmark

Retirement Fund. Benchmark Retirement Fund is an umbrella retirement fund founded and sponsored by RFS Fund Administrators (Pty) Ltd, which has proven itself over the past 23 years to serve the retirement funding needs and interests of Namibian employers and their employees without fail.

This statement is issued in response to false claims, misinformation, propaganda, and malicious and intentional misguided statements aimed at tarnishing the good name of the Benchmark Retirement Fund. Benchmark Retirement Fund is an umbrella retirement fund founded and sponsored by RFS Fund Administrators (Pty) Ltd, which has proven itself over the past 23 years to serve the retirement funding needs and interests of Namibian employers and their employees without fail.

Mr Job Amupanda dedicated his time and effort in recording a widely distributed video where he makes completely inaccurate statements and spreads fear and doubt in the minds of his followers about Benchmark Retirement Fund and about its role in the Namibian pension fund industry as a whole. Mr Amupanda amongst various false and misleading statements claims that the Benchmark Retirement Fund has found ways to loot pension fund monies and to change its rules with NAMFISA’s approval to prevent members from accessing their pension fund monies from the Benchmark Retirement Fund.

We refute the false and misleading information shared by Job Amupanda in the strongest terms and reserve our legal rights. The extent of Mr Amupanda’s ignorance of his understanding of the operation of retirement fund schemes was laid bare in the process of his utterances and it is extremely unfortunate that someone with his following chooses to mislead and misinform the public instead of obtaining the necessary clarity and correct information before venturing into providing public statements.

The Benchmark Retirement Fund is managed by a competent and professional board of trustees and is a model fund, being one of the best managed pension funds in Namibia. A Pension Fund as defined in the Namibian Income Tax Act is required to pay benefits upon the retirement of a member in a certain way. The Income Tax Act prescribes that 1/3 of a member’s capital payable from a Pension Fund may be commuted tax free, whilst the balance of 2/3 of the capital upon retirement is payable in the form of a pension, paid for life to a pensioner. Upon the death of a person receiving a pension paid from a pension fund, the rules of that pension fund will prevail. It is important to establish and understand the provisions in the rules of a particular pension fund, before venturing into general assumptions and making public statements without in depth knowledge.

There are various umbrella retirement funds registered in Namibia, all operating based on current pension fund laws and in compliance with the Namibian Income Tax Act. The Benchmark Retirement Fund is the 3rd biggest umbrella retirement fund, with more than 15 000 members spread across more than 100 different employer groups participating in the fund, since being established by RFS Fund Administrators (Pty) Ltd in January 2000.

We finally wish to point out that the Benchmark Retirement Fund, its trustees and RFS Fund Administrators (Pty) Ltd as its sponsors, also awaits NAMFISA and the Minister of Finance’s decision regarding the implementation of the Financial Institutions and Markets Act (FIMA).

Our various experts at RFS Fund Administrators have spoken out vehemently regarding the impact of FIMA and we invite and welcome everyone to visit our website to inform themselves of the contributions made by RFS and the Benchmark Retirement Fund, through our monthly newsletters on our website (www.rfsol.com.na).

Issued by:

Marthinuz Fabianus
Managing Director

 

The Board of Trustees of the Benchmark Retirement Fund appointed Ms. Sabrina Jacobs as a Trustee of the Fund effective 1 May 2021.

Ms. Jacobs is a Namibian citizen and is 37 years of age. She obtained a Bachelor’s Degree in Human Resource Management and BA Hons Degree in Labour Relations and Human Resources from the Nelson Mandela Metropolitan University. She also completed the Senior Manager’s Development Programme at the University of Stellenbosch Business School. She is currently employed as General Manager: Human Resources at Cymot (Pty) Ltd, an employer participating in Benchmark.

Above: New Benchmark Retirement Fund Trustee, Sabrina Jacobs

Ms. Jacobs has been involved in a number of professional assignments, including:

• Director and Chairperson of the Board of Retirement Funds Institute of Namibia – 2018 to present;
• Principal Officer of Cymot Pension Fund – 2017 to present;
• Trustee at Puma Energy Namibia Retirement Fund – 2014 to 2017;
• Treasurer at Namibia Employers Association – 2012 to 2013.

Ms. Jacobs offers a wealth of experience and expertise and is keen to further improve the functionality and offering of the Benchmark Retirement Fund for the benefit of all its stakeholders.

The Board of Trustees of the Benchmark Retirement Fund has appointed Mrs. Malverene Theron as new Trustee of the Fund effective 1 January 2020. She takes the place of Mr. Martin Moeller whose term ended on 31 December 2019.

Above: New Benchmark Retirement Fund Trustee, Malverene Theron, offers a wealth of experience to the Fund.

Martin Moeller's career in banking stretches back to 1967. He was a specialist consultant to the CIH Group. During his time at Commercial Bank of Namibia/Nedbank Namibia he was a trustee of their pension fund. In his various positions during his banking career he honed his skills in governance, compliance and risk mitigation. His fields of expertise include treasury operations, international and cross-border trade, risk awareness guidance and advisory services for non-resident investments in Namibia.

Above: Outgoing Benchmark Retirement Fund Trustee, Martin Moeller, receives a gift from the trustees of the Fund.

Mrs. Theron obtained an LLB Law degree from the University of Cape Town, is an admitted legal practitioner of the High Court of Namibia and is a member of the Chartered Institute of Procurement & Supply (CIPS). She is currently employed as Procurement Manager at De Beers Marine Namibia.

Mrs. Theron has been involved in a number of professional assignments, including:

• 2016 Conference Speaker at the Annual Procurement Conference in Windhoek
• 2015 Professional Management Excellence (PME) Program through Wits Business School
• 2014 Board Member of NACC (Namibian Competition Commission) - 2 terms (6 years)
• 2011 Board Member of NAMFISA (Namibian Financial Institutions Supervisory Authority) - 2 terms (6 years)
• 2010 Public Presentation on BEE for the Economic Society of Namibia
• 2009 Secretary to Toast Masters International, Swakopmund Branch
• 2007 Project Leader and Manager for drafting the Empowerment Strategy for the Republic of Namibia - (TESEF)
• 2006 Organizing and hosting BEE workshop in conjunction with the Office of the Prime Minister and the Department of Trade and Industry - South Africa
• 2005 Launch of the NPPC (Namibian Preferential Procurement Council) - Chairperson and presenter at the first Black Economic Empowerment Conference, Windhoek

Mrs. Theron offers a wealth of experience and expertise and is keen to further improve the functionality and offering of the Benchmark Retirement Fund for the benefit of all its stakeholders.

The Board congratulates Malverene on her appointment and looks forward to working closely with her in protecting and promoting the interests of the Fund and its members in the years to come!

 

Benchmark Retirement Fund is changing its trustees. In terms of the Financial Institutions and Markets Bill, service providers to a fund can no longer serve as trustees to the Fund once the new Act is effective. Over time, trustees of the Benchmark Retirement Fund who are closely associated with the founder Retirement Fund Solutions (RFS), either as shareholders or employees will not serve on the board.

Günter Pfeifer, who is a shareholder and director of Retirement Fund Solutions, is the first trustee of Benchmark to vacate his position on the board for this reason. His resignation is effective 1 January 2021.

The process of introducing new trustees will be conducted gradually to ensure that the fund has continuity of service from trustees, and that new trustees have the necessary skills and fund governance experience.

The current independent trustees of Benchmark are Harald Müseler (Chairperson), Afra Schimming-Chase and Malverene Theron.

Günter Pfeifer will remain actively involved with Benchmark – as Director Operations, in terms of which he continues to be responsible for the administration and management of the Fund. In addition, RFS’ role as the appointed administrator of Benchmark Retirement Fund, RFS also provides advisory services to Benchmark. The principal advisory responsibility will also vest with Günter Pfeifer, with support from the other RFS directors.

Confidentiality Warning: This message is intended only for the use of the individual or company to which it is addressed, and contains information that is privileged and confidential. If you are not the intended recipient or employee or agent responsible for delivering the message, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify us immediately by telephone, and return the original message, at our cost, to the address above.

Errors & omissions excluded. Markets fluctuate and values quoted may thus be higher or lower when finalised.

In 2018 the local Benchmark Retirement Fund’s assets grew to N$2.920 billion, up from N$2.744 billion in 2017. Its membership grew to 11 548 members.

Despite the challenging operating environment and the proliferation of regulatory requirements, the Fund continues to grow, with new participating employers joining the Fund as well as with a growing number of members preserving their retirement capital in the Fund or choosing to draw monthly pensions from the Fund. The Fund catered to 961 annuitants who received N$54 million in annuities in 2018.

The Fund continues to be managed on a world class basis with a strong focus on governance and is increasingly becoming the number one address in the umbrella pension fund space.

Guest speaker Barend le Grange, Head of Individual Member Support, Sanlam Employee Benefits, at the recent Benchmark Annual Member Meeting. Le Grange noted a distinct trend in retirement funds switching to umbrella funds due to the complexity and cost of administering private funds.

In terms of investments, 2018 was a challenging year as a large number of global and local asset classes performed poorly in difficult economic environments. Investment growth should resume once the global and regional economic outlook improves. Growth of pension fund investments is typically measured over periods of 5 to 10 years, where the long-term returns of investments usually outweigh the short-term impact of restrained growth and recessions.

Günter Pfeifer, Trustee of the Benchmark Retirement Fund, said that the Fund is continuing to prepare for the FIM Bill. He said that the Bill, which regulates non-banking financial institutions, places burdensome conditions on retirement funds. The requirements imposed by the new bill are substantial and it is likely that only very large retirement funds as well as umbrella funds will have the necessary scale to implement these requirements.

Pfeifer also issued a note of caution to guardians of minor dependents. The latest Administration of Estates Amendment Act will have an impact on minor members as their benefits will have to be paid via the Guardians Fund. There may be some payment delays from the Master’s Office to the guardians of these minors since payments by the Master are made quarterly, unlike Benchmark which makes payments monthly.

At the same event, guest speaker Barend le Grange, Head of Individual Member Support, Sanlam Employee Benefits, noted a distinct trend in retirement funds switching to the umbrella funds due to the complexity and cost of administering private funds. He went on to caution participating funds against seeking cost savings at the expense of delivering value to fund members.

The Benchmark Retirement Fund is administered by local pension fund administrators Retirement Fund Solutions (RFS), and has a board composed of independent non-executive trustees, and executive trustees nominated by RFS. It caters for a wide range of requirements ranging from individuals and employees of very small groups to SMEs and larger funds, who require a vehicle that adheres to local standards and regulations. The Fund also caters to retirees, and minor and adult dependents of members.

Background

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?

What risks should we be concerned about?

First consider what risks one is facing. These are:

• Systemic risk
• Prudential risk
• Advice risk
• Market risk
• Volatility risk
• Currency risk
• Scam risk
• Lost opportunity risk
• Liquidity risk
• Investment risk

Does a combination of manager address all these risks?

Combining more than one manager will reduce the prudential risk that something can go horribly wrong with one organisation.  It will reduce the volatility of performance because the volatility of each manager will differ from that of other managers. It will also reduce the scam risk, the liquidity risk and the investment risk of capital loss and underperformance. It will not impact on the advice risk, market risk or lost opportunity risk. Advice risk and lost opportunity risk will need to be managed at fund level, while market risk needs to be addressed by spreading investments across different markets e.g. local and offshore market.

What is an optimal number of managers one should combine?

Evidently a combination of more than one manager within a single investment mandate of a fund does reduce most risks funds face when placing their investments. However will it suffice to engage only two managers or should one engage more than two manager? This is a tricky question and really depends on the skills of the trustees and their objectives.

How bold are the trustees in taking active decisions?

If the trustees are totally averse to actively engage in investment decisions and are comfortable with average returns, the answer is, ‘the more the merrier’ as each additional manager further dilutes the risks, approaching the answer very simplistically. There are of course much more sophisticated methods such as the efficient frontier model that will indicate that little further value is added after a certain number of managers have been combined and from where on one would actually produce negative outcomes.

The Namibian environment sets narrow confines

Being realistic about this within the confines of the Namibian environment, most funds are too small to employ one segregated investment mandates, let alone engaging more than one manager on a segregated mandate but have to invest via unit trusts. Since unit trusts are regulated by dedicated legislation and are subject to statutory supervision, the prudential and scam risks are already reduced to a significant extent and probably require very little additional attention of the trustees.

Due care and skill requires active engagement

Due care and skill would probably require of a board of trustees to engage actively in investment decisions and to achieve results better than the average for their members. This means that they will have to think carefully about how to combine managers and how many managers to combine. Given the wisdom of engaging at least two managers, a successful combination of two managers has the best chance of out-performing but of course also has the best chance of under-performing. The greater the trustees’ confidence in the ability of the selected manager to outperform, the fewer managers need to be combined and visa-versa.

What are your performance objectives for combining managers?

The question then is what objectives do trustees have in combining different managers? The objective can be one of the following:

• Superior performance
  Choosing managers who are likely to outperform the average manager in the long-term. Such a combination may lead to all managers under-, and out-performing the average at the same time. The trustees need to be clear on this and be comfortable with the consequence thereof, particularly in times when all managers under-perform the average. This is obviously the ideal combination given the conviction that all managers should out-perform in the long-term. Unfortunately in Namibia, only very few managers have a long-term history of out-performing the average. The other managers have all had extended periods of either out-, or under-performance, or have no long-term performance history. Performance history therefore does not render any significant level of conviction for any of the managers outperforming the average in the long-term.
  
  
• Above average performance
  Choosing ‘core’ manager/s who is/are likely to out-perform the average in the long-term and an/other non-core manager/s who is/are likely to produce returns mirroring those of the average as closely as possible. The expectation of the non-core manager/s is to cushion any significant under-performance of the ‘core’ manager/s. Performance history should show which manager’s/s’ performance has most closely mirrored the average over the long-term.
  
  
• Hedged performance
  Choosing managers with an opposing investment philosophy and style (i.e. value vs growth). If all managers on each side of the spectrum were to perform equally well and equally poorly during periods advantaging and disadvantaging their investment philosophy and style, the combined performance of these managers should mirror that of the average. Again the realities of the Namibian environment are that there are very few if any managers that can clearly be placed on either side of the spectrum making it questionable whether the hedged performance strategy can be employed successfully.

 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.

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.

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.

The Trustees of Benchmark Retirement Fund regularly review the Fund's Default Portfolio which currently consists of Allan Gray Namibia Balanced Fund (50%), Prudential Namibia Inflation Plus Fund (25%) and Sanlam Namibia Inflation Linked Fund (25%). The blend of these portfolios was found to be an ideal combination for the Default Portfolio as the balance netween capital preservation and maximising capital growth is very important. The combination produces a suitable risk/return profile. The Default Portfolio needs to bear an appropriate amount of risk, which is necessary to achieve adequate real returns during the (long-term) phase a member accumulates savings for retirement. The Trustees resolved to change the risk profile of the Default Portfolio from moderate-low risk to moderate risk.

 

Local umbrella retirement fund, the Benchmark Retirement Fund, breached the N$2 billion mark in May 2016, says Principal Officer Kai Friedrich.

Administered by Retirement Fund Solutions, the Benchmark Retirement Fund was established in the year 2000, at the request of financial professionals, to manage their retirement investments. The Fund subsequently expanded its operations to include participating employers that do not require, or are too small, to have their own private retirement fund. In 2014, ‘Benchmark Mini’ was launched, catering for retirement provision on the part of employees of SMEs.

Talking about the N$2 billion milestone, Kai Friedrich attributes it to a combination of member growth, as well as exceptional investment returns.

He says Benchmark has earned a reputation for prudent management of investments geared to produce superior long-term investment returns, and backs it with strong governance vested in the Fund administrator Retirement Fund Solutions (RFS). This, he continues, gives a high degree or security and trustworthiness, preferred by entities and individuals investing in the Fund. Benchmark's reputation has fueled the growth of its member base, which is currently in excess of 9,000 with 150 participating employer groups.

In terms of governance, Friedrich says that administrator RFS has translated governance principles into operational approaches. These principles include, among others, a high degree of expertise assigned to Benchmark, ongoing adaptation to the dynamic Namibian financial regulatory environment, prompt and transparent reporting to members and stakeholders, a strong emphasis on internal audit and compliance, ongoing actuarial supervision, state-of-the-art IT systems and an off-site disaster recovery centre to secure business continuity.

The independent trustees of Benchmark Retirement Fund are Harald Müseler (Chair), Martin Moeller and Afra Schimming-Chase. Trustees from the ranks of the administrator, RFS, are Tilman Friedrich, Marthinuz Fabianus and Günter Pfeifer. Between the trustees and the Principal Officer the Fund call on exceptional expertise including that of four chartered accountants!

On the topic of investments available through Benchmark, he says the Fund provides for a range of long-term growth strategies in various risk profiles which provide for a range of risk appetites. Investments, he says, are made available in a basket of reputable investment managers that adhere to the requirements of the local regulatory environment.

In terms of investment returns, Friedrich says that the Fund is aims to produce superior long-term growth as is required by the typical retirement investor. He says investment returns are derived from a range of Fund member expectations that run the gamut from capital preservation to CPI + 6%. The Fund's capital preservation option, Friedrich notes, seeks to avoid negative investment returns over any extended period and to reduce volatility.

Friedrich concludes that the Fund offers a totally transparent fee model, unlike other funds which often do not disclose the fact that they 'skim' returns, thereby weakening the member’s prospects of retiring with a livable pension. He adds that Benchmark, at its core, seeks to provide full value to investors through excellent services and superior returns to each individual member of the Fund.

The Benchmark Retirement Fund conducted its 7th annual member meeting at Safari Hotel on 21 July.

At this occasion the Principal Officer, Kai Friedrich (above) gave an overview of the key financial statistics of the fund as at 31 December 2015. Investments held by the Fund's members grew by N$345 million during the 2015 financial year, and the Fund had assets of N$1,963 billion under management for more than 8,800 members.

Günter Pfeifer, Director Operations of the fund presented recent changes to the rules of the fund that introduced new products into the fund.

Download the presentation here...
Download the 2015 Annual Report here...

The fund now caters for:

• Large funds that want to retain their stand-alone benefit and contribution structure while giving up their status as separate legal entity in the face of every increasing governance requirements;
• Medium to large employer groups who take comfort in a standard benefit structure at low cost;
• Small employer groups not catered for in conventional arrangements;
• Members who want to preserve their benefit upon resignation from their employer;
• Members who have reached retirement and want to arrange a pension;
• Beneficiaries of death benefits who need to arrange an annuity –
• ...and for those who want to be part of a fund with an exceptional reputation for unequalled service levels, offering low cost access to reputable, popular pension fund investment managers, monitored by professional trustees, supported by expert investment consultants.

For enquiries on any of these unique Namibian products, email {modal url=https://www.rfsol.com.na/contact?et=19|width=530|height=460}Günter Pfeifer{/modal} or {modal url=https://www.rfsol.com.na/contact?et=22|width=530|height=460}Hannes van Tonder{/modal} or call either on tel 061 231 590 if this is a matter you are currently grappling with.

At the same event, Chris Tisdall of Allan Gray (above) gave an illuminating insight into the future of financial services with his talk on ‘Technology Disruption – A case for hope and caution for long-term investors’. Download the presentation here...

The Benchmark Retirement Fund, a local umbrella pension investment fund announced its 2014 results to members of the Fund, at its annual members meeting on 8 October 2015.

Talking about the 2014 financial results, Principal Officer Kai Friedrich said investments held by the Fund's members grew by N$285 million during the 2014 financial year, and the Fund had assets of N$1,566 billion under management for more than 8,300 members.

Of the 8,300, Friedrich said, approximately 300 are individual members and approximately 8,000 are members under participating employer groups. The Fund had 110 pensioners who received about N$11,6m in pensions during the year. Benefit payments, including withdrawals, resignations, retirement lump sum payments and conversion of member shares into pensions amounted to N$295m.

Viresh Maharaj, Chief Marketing Actuary of Sanlam Employee Benefits in South Africa, said employers can play an important role in preparing employees for retirement.

At the event the role of employers in assisting employees to attain financial well-being was highlighted by Viresh Maharaj, Chief Marketing Actuary of Sanlam Employee Benefits in South Africa. He pointed to the fact that many employees will not be able to retire with a comfortable income due to cash withdrawals from pension savings upon changing jobs. Factors which further compound the issue are use of pension investments to reduce debt and poor management of the transition of an employee from one employer pension fund to another.

He made the point that employees are often not adequately informed of the consequences of leakage when making withdrawals from pension funds. To illustrate the point he used the example of taxation of at least N$200,000 on a withdrawal of N$1 million from a pension investment. He said that employees are often not aware of the taxation on the withdrawal. He went on to say that the amount of taxation paid of N$200,000 could have appreciated to N$1,4 million at retirement had it remained invested at approximately 10% over 20 years, a factor that would materially influence the decision to preserve a pension investment on change of employment.

Maharaj argued for a more responsible role for human resource management in counseling employees on their financial well-being, as well as inclusion of financial skills in employee wellness initiatives.

Maharaj went on to say that financial stress contributes to lack of focus in the workplace on the part of employees, as well as absenteeism. Employers’ concern for financial well-being he said, and the resulting financial wellness of employees improves morale and productivity, and becomes a competitive advantage for the employer.

Danie van Zyl, Head of Guaranteed Investments of Sanlam Employee Benefits, noted the trend of smaller employers switching to umbrella funds rather than utilising stand-alone funds, citing economies of scale in umbrella retirement funds as one consideration. Another reason to move is that the employer carries less fiduciary responsibility in an umbrella arrangement.

At the same event, Kai Friedrich noted that retirement savings of about 12,5 times the annual income of the retiree should have built up at age 60 for a financially secure retirement.

 

 

The Benchmark Retirement Fund, a Namibian umbrella fund, which was founded on 1 January 2000, announced its results for the financial year ending 31 December 2013 to members of the Fund at its annual members meeting held on 16 October 2014 at the Safari Court Hotel and Conference Centre. Among the results it announced strong growth as well as changes to the rules which allow for later retirement.

Talking about the 2013 results, Principal Officer Kai Friedrich mentioned that the Fund's assets grew by more than N$ 300 million during the 2013 financial year, exceeding N$1.3 billion assets under management for the more than 7,500 members at the end of the Fund’s financial year.

Billion dollar umbrella fund for pension investments. Principal Officer of the Benchmark Retirement Fund, Kai Friedrich, announced that the Fund's assets under management grew by more than N$ 300 million in 2013 to an amount now exceeding N$1,3 billion at the end of 2013.

Of the 7,500 members, Friedrich noted that more than 300 are individual members and more than 7,200 are members of participating employer groups. The Fund now also has in excess of 80 pensioners drawing a regular income from the Fund. If an average household has an estimated 4 family members this would mean the Fund is touching the lives of roughly 30,000 people in Namibia, he stated.

Friedrich announced that one of the milestones reached during the year was to amend the rules of the Fund to increase the late retirement age from 70 to 75. This, he said, was done to follow global trends that show increasing life-expectancies and with that, delayed retirement.

Friedrich said that this rule amendment was particularly aimed at allowing longer preservation of retirement capital in order to maximize the effect of compounding of interest, especially in the late stages of a member’s working life, where this has the biggest impact. He further noted that the lower limit of early retirement according to the rules of the Fund remains at 55 years of age.

Friedrich said that the continuously changing Namibian regulatory environment in terms of compliance with NAMFISA's quarterly reporting requirements, as well as compliance with investments in unlisted investment vehicles, for example, remain a challenge for the industry. He was confident though that the Fund is taking all necessary measures to ensure that it will to comply with changing regulatory requirements.

Pieter Koekemoer, Head of Personal Investments at Coronation Fund Managers, talked about the status of global markets and gave pointers on the applicability of South Africa’s Pension Fund reforms in the Namibian environment.

Friedrich said that the Fund continued to place a high degree of emphasis on governance. In this regard,  during 2014 the Fund finalized its risk and communication policies in terms of its governance framework. He stressed that the Fund holds itself accountable to its members and, in addition to regulatory compliance measures, it is subject to an annual audit and actuarial review as well as providing monthly and quarterly investment reports.

The current Board of Trustees of the Benchmark Retirement Fund consists of three independent trustees, namely Harald Müseler (Chairperson), Martin Moeller and Afra Schimming-Chase and three sponsor appointed trustees, namely Marthinuz Fabianus, Tilman Friedrich and Günter Pfeifer.

Steady growth. Principal Officer of the Benchmark Retirement Fund Günter Pfeifer stated that the Fund is well governed and is achieving its objectives in servicing its members.

Talking about the Benchmark Retirement Fund's 2012 results at the Fund's AGM held on 26 September 2013, Robert Grant, partner of KPMG, confirmed that the member’s investments grew by N$ 224 million during the 2012 financial year, and that the Fund had assets of more than N$ 1 billion under management for more than 6,000 members.

The Principal Officer of the Fund, Günter Pfeifer noted that the Fund is structured to provide an distinctive range of retirement investments to fulfill the requirements of a wide range of Namibian investors. He went on to say that the Fund's Default Portfolio remained a popular choice.

Talking about activities in 2013, Pfeifer said that governance and administration of the Fund continue to be key focuses, and that the Fund was implementing additional measures to further improve the member’s experience in dealing with the fund. According to Pfeifer, the new measures are expected to further enhance reporting time lines.

"The Fund has pinned its reputation on accountability to its members, and the ability to report rapidly and accurately to our members, on their individual investments, is one of the aspects that sets it apart in the market. The enhanced administration measures will shift the goalposts for Namibian pension fund administrators," he said.

He added that the Fund was in the process of drafting a Communication policy which will augment the Fund's governance structures and processes.

Pfeifer also announced that he would step down as Principal Officer of the Fund with effect from 1 October 2013. The role, he said, will be taken over by Kai Friedrich. Pfeifer will now focus on executive management of the Fund, and will join the Board of Trustees as an additional member.

The current Benchmark Board of Trustees consists of Harald Müseler (Chairperson), Marthinuz Fabianus, Tilman Friedrich, Martin Moeller and Afra Schimming-Chase.

At the AGM, Sara Herbert of NMG Consultants issued a caution to retirement investors approaching retirement age. She said that investors should carefully consider adopting a too conservative approache during the late stages of investing for retirement, as this strategy might have a negative impact on the accumulation of their retirement capital.

IJG's Head of Research, Romé Mostert, gave a presentation on the short-term outlook for the Namibian economy, indicating that he expected an upturn towards the beginning of 2014. This should bode well for the investments of retirement members who are required to invest at least 35% of their assets in Namibia.

 

Steady growth. Principal Officer of the Benchmark Retirement Fund Günter Pfeifer stated that the Fund is well governed and is achieving its objectives in servicing its members.

Talking about the Benchmark Retirement Fund's 2012 results at the Fund's AGM held on 26 September 2013, Robert Grant, partner of KPMG, confirmed that the member’s investments grew by N$ 224 million during the 2012 financial year, and that the Fund had assets of more than N$ 1 billion under management for more than 6,000 members.

The Principal Officer of the Fund, Günter Pfeifer noted that the Fund is structured to provide an distinctive range of retirement investments to fulfill the requirements of a wide range of Namibian investors. He went on to say that the Fund's Default Portfolio remained a popular choice.

Talking about activities in 2013, Pfeifer said that governance and administration of the Fund continue to be key focuses, and that the Fund was implementing additional measures to further improve the member’s experience in dealing with the fund. According to Pfeifer, the new measures are expected to further enhance reporting time lines.

"The Fund has pinned its reputation on accountability to its members, and the ability to report rapidly and accurately to our members, on their individual investments, is one of the aspects that sets it apart in the market. The enhanced administration measures will shift the goalposts for Namibian pension fund administrators," he said.

He added that the Fund was in the process of drafting a Communication policy which will augment the Fund's governance structures and processes.

Pfeifer also announced that he would step down as Principal Officer of the Fund with effect from 1 October 2013. The role, he said, will be taken over by Kai Friedrich. Pfeifer will now focus on executive management of the Fund, and will join the Board of Trustees as an additional member.

The current Benchmark Board of Trustees consists of Harald Müseler (Chairperson), Marthinuz Fabianus, Tilman Friedrich, Martin Moeller and Afra Schimming-Chase.

At the AGM, Sara Herbert of NMG Consultants issued a caution to retirement investors approaching retirement age. She said that investors should carefully consider adopting a too conservative approache during the late stages of investing for retirement, as this strategy might have a negative impact on the accumulation of their retirement capital.

IJG's Head of Research, Romé Mostert, gave a presentation on the short-term outlook for the Namibian economy, indicating that he expected an upturn towards the beginning of 2014. This should bode well for the investments of retirement members who are required to invest at least 35% of their assets in Namibia.

 

Benchmark Retirement Fund has released its financial highlights for the year ended 31.12.2011, and has been given a clean bill of health by its auditor and actuary.

Invest smarter for a longer lifespan, local expert says
Benchmark members meeting looks at Namibian pension fund market

Invest smarter for a longer lifespan. Local investment expert Sara Herbert of Jacques Malan Consultants & Actuaries told investors in the Benchmark Retirement Fund that advances in medical science meant they could expect to live longer, and that they needed to make retirement investment decisions in light of this.

Investec Director Jeremy Gardiner gave an interesting, humorous speech on forces shaping the market, and highlighted a number of glaring inconsistencies.

The Benchmark team FLTR: Marthinuz Fabianus (Trustee appointed by the founder), Günter Pfeifer (Principal Officer), Tilman Friedrich (Trustee appointed by the founder), Harald Müseler (Chairman, independent of the founder), Martin Moeller (Trustee, independent of the founder) and Mark Gustafsson (Trustee appointed by the founder). Not on the photo: Afra Schimming-Chase (Trustee, independent of the founder).

Advances in medical science mean that people will live far longer, so pension investors need to adopt different strategies and consider retiring later to ensure that their pension funds can last for the duration of their lives. This was the message given by Sara Herbert of Jacques Malan Consultants & Actuaries at the Annual Members Meeting of the Benchmark Retirement Fund on Tuesday, 18 September 2012. Her sentiment was echoed by Jeremy Gardiner, Director of Investec Asset Managers at the same meeting.

Herbert, who advises the Benchmark Retirement Fund on investments, went on to counsel pension investors to carefully consider their investment strategies and seek sound advice, citing the common practice of adopting overly conservative investment strategies when approaching retirement age. She explained how a conservative investment strategy could reduce the capital value of a pension investment, and the period during which the amount could be useful to the pensioner.

Given the emotional nature of personal investments, and the potential losses, Herbert said it is important for investors to seek impartial advice.

Talking about the retirement fund's annual results, Robert Grant of KPMG stated that Benchmark grew by approximately N$ 190 million during 2011 financial year. This bears testimony to a high level of trust Namibian pension investors place in the Fund, according to Principal Officer of the Fund, Günter Pfeifer.

He went on to point out that the fund membership approached 6,000 during the period and stated that the fund expected to administer assets in excess of N$ 1 billion in the very near future.

Asked about how he expected local pension funds to perform in the face of tough financial conditions across the world, Pfeifer said, “It is not possible to predict how pension investments will perform and pension investments are not immune to these tough conditions. A carefully selected investment strategy needs to be followed to minimize any negative impact.”

“While the investment portfolios utilized by the members and member organizations are determined in conjunction with their investment advisors and employee benefit consultants, the Fund has made a suitable range of investment portfolios available for the members to choose from. People also need to remember that an investment into a pension fund requires a long-term horizon. Although investment returns may be volatile and negative at times, the typical market-linked, balanced investment portfolio should deliver growth in excess of inflation over periods longer than 5 years. And proper administration of member investments ensures that unnecessary leakage is avoided.”

Asked about the trend to choose Namibian administrators, Pfeifer said. “Increasingly, individuals and organisations are recognising that Namibia has its own legislative requirements. This requires local expertise to ensure adherence with those regulatory requirements. Members and member companies should also benefit from local accountability and transparency.”

“Benchmark excels with detailed, regular and transparent reporting and provision of information to its members. The fund has consistently provided communication above and beyond the regulatory requirement, which includes the Annual Member Meeting, voluntary annual actuarial valuations and financial reports. The Fund’s growth can, to a large extent, be attributed to the market appreciating this approach. The expected amendments to legislation affecting retirement funds will have a major impact on our members, so we have been reporting to our members on this, as well as engaging the industry and policy makers” he continued.

“We expect the industry to continue maturing, and as a result of this, more and more Namibians will switch to highly focused, expert administrators,” Pfeifer concluded.

 

 

Has its growth put a cap on its ability to outperform?

We know that Allan Gray Ltd as a business has certainly changed significantly over the years. Whereas initially, it predominantly managed pension assets, it is now a significant player in the retail investments sector and this is borne out by the huge increase in its staff complement and the size of assets under management. The question arising is whether Allan Gray Ltd, purely as the result of it size relative to the market, is arithmetically still able to outperform the market by any meaningful margin.

In this regard, it was interesting to learn that as far Allan Gray Ltd’s relative size and its ability to deploy its strategy across the equity universe is concerned, its equity holdings of R 163 bn, represented 3.6% of the JSE ALSI free float of R 4.5 trn in 2010 compared to 2.6% (R 32 bn) in 2002. So while its relative size has grown by around 38% over this 8 year period, it still holds only a very small portion of the JSE ALSI free float.

Will its portfolio structure imply continued underperformance?

We are aware that Allan Gray Ltd’s portfolio structure differs materially from that of the other local asset managers. Its effective local equity exposure is 40% compared to the average competitor’s 50%. Its total offshore exposure is 30% compared to the average competitor’s 22%. Within local equities, Allan Gray Ltd’s exposure is heavily tilted towards Sasol and gold mining with an exposure of 24% of equities compared to 10% of its average competitor, who holds the difference in other resources. In addition, Allan Gray Ltd’s top equity holdings are typically Rand hedge shares.

In this context, the investor’s view on our local currencies is key to concluding on Allan Gray Ltd’s portfolio structure and its ongoing relative performance. Amongst analysts there are two distinct prevailing views, the one being that the Rand is significantly overvalued and the other one taking an opposite position. You do not need to be an investment expert to appreciate the impact Allan Gray Ltd’s contrarian structure should have on performance at times of a strong Rand. If your view is that the Rand is likely to strengthen further, you are likely to experience more disappointment from Allan Gray Ltd.

What is Orbis doing to avoid continued disappointment of its investors?

On the offshore side Orbis has also disappointed its investors by its underperformance. The question that crossed our mind is whether Orbis is ‘close enough to the action’ in the far-east and whether its business model is flawed to that extent.

Interestingly Orbis recently announced its decision, that a number of its analysts will be relocated to the far-east. At the same time, it was pointed out however, that Asia ex Japan assets constitutes only  approximately 6% of Orbis' total assets under management. The move was done in order to enhance that particular team’s research capability. Orbis continues to follow the exact same philosophy and process that the firm has employed since inception in 1990.

Allan Gray Ltd and Orbis do not believe any deficiencies exist that would have caused recent  underperformance. It was pointed out that the investment philosophy shared by both firms is such that periods of short-term underperformance are inevitable and such periods have been encountered in the past throughout the history of both firms. They nevertheless do not believe such short term underperformance equates to an inability to deliver superior investment performance over time.

Are developments concerning the Windhoek office indicative of deeper lying problems?

We have seen a staff turnover in the Windhoek office just shy of 100% over the past 10 years, while it was rumoured that Allan Gray Ltd recently lost its GIPF mandate.

In this context it was pointed out to us that since opening in 1996, the Namibian office has delivered superior long-term investment performance to its clients. Allan Gray Ltd gauges this as its key measure of whether the Namibian office has been successful as a business or not, and maintains a high degree of conviction in its ability to continue to do so in future. It nevertheless seeks to implement changes in the manner in which its staffing is organised, but this is aimed at creating a significantly more vibrant work environment for its staff. Allan Gray Namibia had nine employees, three of whom have left over the past year, whilst the former managing director remains a non-executive director on the board, as well as a consultant to the business. Of the staff that has departed, two replacements were already put in place, whilst an additional two persons are in the process of being recruited. Most important to Allan Gray Ltd is that client servicing has been unaffected by these recent staff departures.

It was pointed out to us that even though Allan Gray Ltd recently lost N$ 1 bn of GIPF assets, it currently still manages some N$ 2 bn of GIPF assets. Allan Gray Ltd is not aware of any intention of the GIPF to leave as a client, and is not aware of the source of this rumour.

Will Allan Gray Ltd continue to be an owner managed business?

We know that Allan Gray himself, now being well in his 70s, and who must be credited with the historic achievements of this business, has withdrawn from the day-to-day activities of the local business since 1990. Being aware that Allan Gray already made over a substantial portion of his interest to the staff share trust and the Allan Gray Orbis Foundation, our concern is whether this already has or may eventually lead to a change in the business dynamics of this asset manager that has already or may eventually impact on its performance.

Without disclosing Allan's exact shareholding level, it was confirmed that Allan continues to be the controlling shareholder in the business, with the balance owned by current and former senior executives, the Allan Gray Orbis Foundation and the Staff Share Trust. It was also pointed out that since Allan's departure from active management of the firm in 1990, Allan Gray Ltd has had a number of generations of investment leadership in place, who have all delivered superior investment performance over time to clients and that this is expected to remain the case going forward.

It was indicated in the Orbis Presidents letter for 2009 that the Gray family was considering the dedication of the economic benefits from its ownership in Orbis to a philanthropic body known as the Orbis Founders Philanthropies, whilst voting control would vest in an independent body. Whilst there has been internal discussion about something similar occurring in regard to Allan Gray Ltd, the firm has made no public statements in regard to the latter, or what particular shape this could take. The reason for this is that any specifics discussed internally may take a different form once/if finalised and announced publicly.

It was suggested that Allan Gray Ltd would remain an owner managed business, were Allan to leave his shareholding to a philanthropic body. Current and former executives are meaningful shareholders in the company, and have been so ever since Allan relocated to London in 1990. Their economic fortunes and those of future leaders within the firm (as well as staff through the staff trust), shall remain strongly tied to whether the firm delivers on its long-term mandate or not.

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.