Contributed by Carmen Diehl, C.A.(Namibia), Senior Manager: Risk Management and Compliance
The FIMA (Act 2 of 2021) was promulgated in Government Gazette no. 7645 on 1 October 2021. The Minister of Finance has not yet set a date for it to become effective. Although it has been inactive since its promulgation, following last year’s elections, we can expect action on it again in 2025, once the new Minister of Finance has settled into her role. NAMFISA, however, has not been idle, spending a lot of time revising and issuing FIMA standards and regulations. In the next few issues of this newsletter, we will present the latest status on the standards and regulations and provide a brief overview.
This summarises the main provisions of draft standards and regulations under the FIM Act and implications for retirement funds.
Standards Chapter 5: Retirement Funds
RF.S.5.20 Matters to be included in a code of conduct
The statement does not disclose to whom it applies.
Summary:
- The standard outlines the essential elements that must be stipulated in the code of conduct for the board of a retirement fund and must be included in the rules of the fund:
- Duty of Attendance of meetings: The code of conduct must include the minimum attendance requirement.
- Duty of Active Engagement: Board members must actively engage in board activities, not be merely passive vote-casters at meetings.
- Duty of Prudence: Board members must discharge their responsibilities with skill, diligence and prudence and ensure that the fund is not unduly exposed to risk of loss.
- Duty to Protect the Fund: The fund must be operated subject to taking appropriate measures to identify and control risk.
- Duty of Avoidance and Fair Dealing: Board members should avoid conflicts of interest, and if unavoidable, adequately manage such conflicts.
- Duty of Independence: Board members must exercise independent thought and analysis when considering the board's business.
- Duty of Efficiency: Board members must incur only necessary expenses, ensure that meeting expenses are reasonable and ensure that the bases for the expense charges of service providers are reasonable.
- Duty to Monitor Performance: Board members must monitor the investment and administrative performance of the fund.
- Duty to Hold Service Providers Accountable: Board members must monitor the performance of and hold service providers accountable to maintain high professional standards.
- Duty of Compliance: Board members must ensure compliance with all applicable legislation, regulations, and standards.
- This standard must be read in conjunction with Standard No. GEN.S. 10.9 – Code of Conduct.
What to do:
- Fund rules should provide for making and receiving transfers and amalgamating with other funds in compliance with this standard.
- Umbrella funds should draw up a transfer agreement template per this standard.
RF.S. 5.22 Transfer of any business from a fund to another fund or from any other person to a fund
The statement does not disclose to whom it applies.
Summary:
- The standard specifies the requirements and procedures for transferring business from one retirement fund to another.
- Prohibited Transfers: Transfers are prohibited if either fund is non-compliant with the Act, involved in legal action, technically insolvent, or not authorised by its rules to transfer or accept transfers.
- Approval Requirements: NAMFISA must approve the transfer, ensuring it is in the interest of members of both funds. The transfer agreement must address members' concerns, comply with the Act, and protect accrued benefits.
- Transfer Agreement: Must include provisions for protecting members' benefits, equitable treatment of members, recognition of service periods, and a detailed analysis of the transfer's impact.
- Independent advisor or valuator reports, if applicable, must be appended to the transfer agreement upon submission to NAMFISA
What to do:
- Fund rules should provide for making and receiving transfers and amalgamating with other funds in compliance with this standard.
- Umbrella funds should draw up a transfer agreement template per this standard.
RF.S.5.23 Fees that may be charged for copies of certain documents
The statement does not disclose to whom it applies.
Summary:
- Free Copies: Members are entitled to receive copies of specific documents free of charge, including the fund's rules, governance documents, annual reports, certificates of registration, notices required by the Act, applications for material changes, and any amendments to these documents.
- Reasonable Fees: Funds may charge reasonable fees for copies of documents not required to be provided by the Act or specifically requested by a member. These documents include previously provided documents, recent reports from auditors and service providers, other board reports, meeting minutes, and legal opinions involving the fund.
- Format of Copies: Members can request documents in either paper or electronic format. Electronic copies are provided free of charge, while paper copies may incur a reasonable fee. If a document is difficult to copy, the fund may offer an excerpt of the document free of charge.
- Board Approval of Fees: Fees for paper copies must be approved by the board on a cost-recovery basis. The board may delegate this approval to the principal officer, but must review these approvals regularly.
- Summary of Provisions: The board must prepare and distribute a summary of these provisions to each member free of charge.
- Related Standards: This standard should be read with Standard No. RF.S.5.13, outlining the requirements for a communications strategy to ensure adequate and appropriate information is communicated to members, employers, and sponsors.
What to do:
- Funds should establish a list of documents that members are entitled to at no cost.
- Funds should establish a list of documents that members are entitled to at a fee and set the fee that must be reviewed annually.
- Service level agreements with service providers must be updated with the service providers’ involvement in providing documents.
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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