In this newsletter, we report on latest company developments, we provide an update on Namfisa reporting , Regulation 29, the FIM Bill, we comment on amendments to the Labour Act, we provide a summary of financial statistics with regard to the financial services industry, and some interesting media clippings.
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Tilman Friedrich's Industry Forum
Benchtest Monthly 06.2012
In June our average prudential balanced portfolio returned 0.47% (May minus 0.65%). Top performer is Stanlib (1.41%), while Investec (minus 0.40%) takes bottom spot.
The severe economic woes of Europe just do not seem to end and will be around for quite some time. The US is in no better position and is still alternating between recession and some green shoots in the economy while every now and then, prospect of further monetary stimulus raising its head. Consumer sentiment has certainly shown little signs of improvement in the US while it is still in reverse gear in Europe. China which has enjoyed double digit growth over an extended period has experienced a significant decline in economic growth’ to an official 7.5% for the latest quarter, and this is said to be ‘faked growth, the real growth estimated to have only been 7.1%. This after economists earlier this year expected the Chinese economy to cool to around 9% growth, everything lower at that stage seen as a ‘hard landing’. In short what has driven our economy and that of other developing countries is in reverse gear and is unlikely to improve for an extended period of time.
For further analyses and our views download the report, here...
RFS company news
RFS welcomes Bank of Namibia
It is with great pride that we announce our appointment as administrator to the Bank of Namibia Provident Fund with effect from 1 July 2012. It is a feather in our cap to have engendered the trust and confidence in our capabilities of the board of trustees of this fund. We sincerely welcome our new prestige client and look forward to a long and mutually satisfying relationship!
RFS one of the largest trust money managers in Namibia
With our latest appointment, the total fund membership under our administration increases to 31,000, including 2,300 pensioners. We are now entrusted with client assets in excess of N$ 10 billion and annual contributions of N$ 650 million from annual client payrolls totalling close to N$ 4 billion! From that perspective, RFS is now one of the largest trust money managers in Namibia!
News from Namfisa
UPDATE: New reporting requirements
Namfisa is currently in the process of discussing its requirements with stakeholders and indicated that this process should be finalised by September. Regulation 28 reporting has in the past been done at asset manager level in respect of total assets managed by each manager, of which there are only around 15 that manage pension fund assets.
The draft revised regulation 28 envisages that the reporting responsibility will be shifted from the asset managers to the funds. In terms of the current status, reporting entities will increase from 15 asset managers to the 95 funds registered in Namibia, and will come at some cost. We are investigating how we can assist our clients to comply with this requirement and will advise on the way forward after further consultation with Namfisa.
UPDATE: Regulation 29 – where to from here?
As reported in last month’s newsletter we are engaging stakeholders regarding the establishment of an industry sponsored SPV to pool pension funds’ capital commitment towards unlisted investments, either through or with the assistance of the Retirement Funds Institute.
We repeat our suggestion that principal officers should table this idea as soon as possible, with the view to funds taking an early decision that will guide their principal officer and investment managers on how they need to respond to this challenge.
CONSULTATION: New drafts of Namfisa Bill and FIM Bill
The Minister of Finance together with Namfisa recently hosted a consultation session regarding the revised drafts of the Namfisa Bill and the FIM Bill. Stakeholders were invited to submit further comments on principles. A summary of industry comments prepared by Namfisa and discussed at the consultation meeting can be downloaded here...
Regulation 28 – has it benefited fund members?
We recently came across an analysis that shows Namibian pension funds have generally lost between 0.5% and 1.2% return per annum, against their South African peers. For a typical pension fund member, in the current economic environment, who reached retirement after 30 years of membership of the fund, this means that his or her retirement benefit would be between 14% and 30% lower than that of the South African peer.
Measuring the benefits that the Namibian Regulation 28 may have produced for the Namibian economy will not be possible. It is nevertheless information that stakeholders and decision makers should bear in mind.
Law and legal snippets
The NEF discusses the latest changes to the Labour Act
Louis Theron, Director Support Services of RFS, provides some feedback on concerns raised at a recent meeting of employers, hosted by the NEF. Find the feedback here...
Namfisa Statistical Bulletin – Pension funds in perspective
In this report recently published by Namfisa, you will find interesting financial statistics on the financial services industries regulated by Namfisa.
Here is a summary for 2011 calendar year, values given in N$ millions:
Total Prem / Contrib
Medical aid funds
REMINDER: Coronation closes portfolios to new clients
Coronation Fund Managers (Coronation) recently announced the closure of all Balanced and Absolute Mandates to new institutional clients with effect from 31 December 2012. In line with that announcement and due to the fact that Coronation is Namibia Asset Management’s (NAM) technical partner, NAM likewise announced that it will not accept new mandates from new institutional clients effective 31 December 2012.
Compliment from a broker received in March 2012
Dit is ‘n absolute plesier om “besigheid” te doen met RFS juis omdat die dienslewering 101% is. Hou tog asseblief aan met die gehalte!
Interesting media snippets
Think Libor’s bad? Fake China GDP is worse
Global economic forecasts nowadays are meaningless if they do not consider developments in the Chinese economy as a key contributor to the global economy. In this article, John McDonald comments on CNBC that “…lying by governments and banks – be it Libor rates or GDP statistics – raises the systemic risk to the market, which is much worse than economic risk.”
Four challenges of the SA Retirement fund industry
In an article by Richard Morris, associate director PricewaterhouseCoopers, in June 2012 issue of Cover Magazine the author concludes on 4 very topical matters:
He expresses views very much along the lines of an opinion piece (‘Has the pension funds industry been led astray by its advisers?’) in our March newsletter.
How to provide more economic, efficient and effective solutions
Pursue economies of scale and pass these on to members
Avoid complex services of doubtful value and focus on retirement not risk benefits
Seek to avoid fruitless costs on acquiring an annuity outside the fund on retirement
Download the article here...
How the world has developed and how it could develop
in the future
This article in MoneyMarketing provides interesting food for thought for policy makers, suggesting that based on the experiences of successful countries, every developing country has the potential to sustain 8% annual growth (or higher) for several decades, and to become a middle- or even a high-income country in one or two generations.
The key is to have the right policy framework in place to facilitate private-sector alignment with the country’s comparative advantages, and to benefit from latecomer advantages in the process of structural change.
A two decade long pension scandal nears its end
For those readers who took a keen interest in the ‘Gavalas Option’ of raiding pension fund surpluses, here is a report from FANews on the status of this affair.
Pension backed housing loan guarantees
In this article by Pieter Cronje in June 2012 Pensions World, the author provides some guidance on what may or may not be acceptable with regard to sectional title and shareblock ownership, property owned by a trust, company or close corporation, buying or erecting an informal dwelling and buying building material.
Providing more than just a pension
In this article by Michelle Human, senior legal specialist Liberty Retail SA, in Pensions World June 2012, the author points out that a pension fund offers more than just a pension. namely:
It protects your money from your temptation,
It protects your money from your creditors,
It protects your money from estate administrative costs, in SA also from estate duty,
It protects the interests of your dependants in the event of your death before retirement, and
It postpones and reduces your income tax liability.
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.