Dear reader

In this newsletter we provide investment performance statistics for July, we bring you some RFS company news, we look at investing in uncertain times and at employer risk where an employee is absent without pay and  there are a few links to interesting articles that recently appeared in various media.

Please feel free to comment: tell us what you value and how we can improve the content.

Find more information and news on our website, here...

Regards

Tilman Friedrich

Tilman Friedrich's Industry Forum

Company news

Firstly we would like to welcome new private fund clients, Namibia Development Corporation and Metje & Ziegler both of whom appointed us  to administer their funds effective 1 October 2011.

We are also pleased to welcome the following employers who joined the Benchmark Retirement Fund since January last year: Ohorongo Cement; Radio Electronic; Keyplan Water Treatment; Hartlief Raith; Namibia Training Authority; Benguella Sea Products, Powercom (Leo); Tyrepro; Legal Assistance Centre; Channel 7; Pathcare and Diesel Electric.

We look forward to a long association and trust that we will be able to stand up to our credo of ‘letting you sleep in peace’ while we look after your retirement funding arrangement.

Of course, managing this inflow of new business requires an expansion of our staff complement. We would like to welcome Mrs Enda van Wyk who joined us from Alexander Forbes as fund administrator in our Benchmark division. A hearty welcome also to Mrs Audrey Haoses who joined us from NHP as fund accountant in our private fund division.

Our total team, including 3 part-time staff, has grown to 46 over the 12 years since the company was established. It’s worth noting that over the past 12 years, only 9 staff resigned, two of whom re-joined. And this is no coincidence as it is part of our philosophy! We believe that staff retention is key to the success of pension fund administration as this preserves the history of our clients.

A sense of belonging:  SKW Youth Soccer Tournament, a walk in aid of Dagbreek School and Project Lilie

We take our social responsibility and community oriented activities seriously, Recently we supported the principle of ‘mens sana in corpore sano’ by involving ourselves, as we do every year, in the SKW Youth Soccer Tournament (below). Find out more about the event, here...

Our principle is that we get involved ourselves, and ask our team to take part in our community involvement as much as they take part in our business. This principle was very much in evidence when sixty members of staff, and their family members, awoke early on a Saturday to take part in a walk in aid of Dagbreek school (below).

Education is an important feature of our agenda, and for several years the company has supported Projekt Lilie, an unique project to improve education in Namibia. The annual gala evening is coming up on 24 September. Are you interested? Find out more about the project and make bookings for the gala evening, here...  

How to invest in uncertain times

Placing all your eggs in one basket during uncertain times, as we are going through right now, can be pretty unnerving, whether you coincidentally have chosen the ‘right’ manager or not. If you were so fortunate to have chosen the ‘right’ manager at the right time, you still have to be cognizant that times will change. Just when, and will you rely on your good fortunes to pick just the right time once again? I would rather not bank on it! If you were less fortunate, your manager is underperforming and this is unnerving too and it would take more conviction than most of us possess to stay put!

The obvious answer for greater peace of mind is to choose another manager. Your choice will be choosing between two or more with a similar philosophy, alternatively two or more with opposing philosophies. The first approach is probably more suited for someone intent on reducing his counter party risk, the second one, for reducing market risk. The first one is suited for someone with a strong conviction, the second one for someone who is undecided on where markets are headed. Be aware that the more managers you choose the closer your return will move towards the average.

Find a review of a few managers with contrarian views that may assist you in choosing your investment manager/s, here...  

Do your conditions of employment adequately address staff absence?

Absence without leave and unpaid leave can present the employer with a serious pecuniary risk if these situations are not properly addressed in your conditions of employment.

Most pension fund rules and the underlying reassurance policies do not provide death or disability benefits in the case of absence without leave or in the case where no premiums are paid to the underwriter due to the member being on unpaid leave for an extended period. Typically employers would suspend payment of contributions to the fund as soon as an employee is absent without leave or if the employee proceeds on unpaid leave.

But what do your conditions of employment say about such situations? Usually they would be silent. In the event of approved unpaid absence, the employee can therefore rightfully assume that all benefits offered by his pension fund will remain in force.

In the case of an employee who is absent without leave, the reason for his absence may only become apparent after some time and it may then be revealed that the absence was in fact legitimate. Should something have happened to the employee during his legitimate absence, the employee/ his dependants may equally assume that all benefits offered by his pension fund are still in force.

We have come across the following clauses in an employment contract that may be worth considering, should your employment contract or conditions of employment not adequately cover you.

ABSENCE WITHOUT LEAVE

The EMPLOYEE will be obliged to furnish the EMPLOYER with an acceptable reason for his/her absence from work without the EMPLOYER’S permission by not later than the close of business on the day of such absence. Any unauthorised absence of more than 2 (two) consecutive days without a valid reason, will be regarded as a breach of this agreement and if found to be guilty, a serious offence warranting immediate dismissal. Notwithstanding anything to the contrary, all contributions to and benefits by the EMPLOYER’S retirement fund shall be suspended for any period of absence without leave in excess of 15 consecutive days in any month.

UNPAID LEAVE

During any period of unpaid leave in excess of 15 consecutive working days in any one month period, as may be agreed upon between the EMPLOYER and the EMPLOYEE, all contributions to and benefits by the EMPLOYER’S retirement fund shall be suspended for the entire period of unpaid leave, unless other arrangements are agreed upon by the EMPLOYER, on the request of the EMPLOYEE.”

Law and legal snippets

The new Namfisa Bill and Financial Intermediaries
and Markets Bill

The two new bills will challenge the pensions industry. Namfisa had to hire a whole team of foreign experts to produce something that will overwhelm the regulator, the financial services industry and our courts, that will create uncertainty and conflict. As usual the devil will lie in the detail that has not seen the light of day yet, such as the ‘standards’ and regulations. Get a glimpse of changes that the pensions industry is facing with these new bills, here...  

Interesting media snippets

Where angels fear to tread

In the absence of private sector solutions to provide pension coverage for low-income workers, the state is forced to step in. But is it doing so in the right way, asks Robin Sherbourne in a recent Insight Magazine article. Read the text of the article, here...  

New survey reveals South Africans lack awareness around retirement savings

The results of the 2011 Old Mutual Retirement Monitor released today in Johannesburg reveal that a lack of awareness around personal retirement savings and contributions to retirement schemes is one of the key reasons why the majority of working South Africans are not saving enough for retirement. More... 

Allan Gray remains foremost asset manager

Allan Gray continued to hold its status as top retail asset manager. So reports Ryk de Klerk, founder and director of PlexCrown Fund Ratings, the methodology used to determine the winners of the annual Raging Bull Awards for the unit trust industry. More... 

SA Consumer no longer forced to prove defect on part of supplier

The Consumer Protection Act (CPA) has introduced the concept of “strict liability” on the supplier of goods. As a result of this legislation, insurance companies may see a rise in liability claims and legal defence costs, whilst the parameters of the CPA may be tested in the Courts. More... 

And finally, some wise words…

“You cannot legislate the poor into freedom by legislating the wealthy out of freedom.  What one person receives without working for, another person must work for without receiving.  The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend is about the end of any nation.  You cannot multiply wealth by dividing it"

~ Dr Adrian Rogers, 1931

Tilman Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner™ practitioner, specialising in the pensions field. He is a member of the marketing committee of ICAN and a member of the legal and technical committee of RFIN. Tilman is co-founder, shareholder and managing director of RFS.