Dear reader

In this newsletter we provide a brief review of 2014, we comment on the global investment markets with specific reference to the sharp drop in global oil prices;  we introduce you to Louis Theron, Director Support Services; Marthinuz Fabianus appointed member of the Social Security Commission; new client appointments of RFS and we provide a number of links to interesting and relevant articles in various news media.

Our mobile site

For the convenience of readers using smart phones with small screens we have developed a brand new mobile website. Try it out on your mobile at www.rfsol.com.na and let us know if you like it – and also if there is additional functionality that you want.

As always, your comment is welcome, so open a new mail and drop us a note!

Regards

Tilman Friedrich

As 2014 comes to a close...

We have nearly come to the end of the year again, and it is an opportune moment to look back over the past year and years. In doing this, we are proud of what has been achieved and we are grateful to those that have made this possible. The achievements over the past 15 years have certainly exceeded all our expectations and bear testimony to the loyalty, commitment and dedication of our staff and the appreciation of their efforts by the retirement funds market in general and our clients in particular who have supported us loyally over many years.

Much of the success has not come by design but rather by default as we never set out to grow as large as we have to date. We never tried to capture market share through undercutting the prices of our competitors and we never aggressively addressed the market with this goal in mind. We just did our job and we did it with heart and soul! This has convinced and impressed the market to the extent that most of our clients today came to us after already having bought into our business model.

After 15 years in the business, we now administer 35,000 members with assets of 14.5 billion and we employ 59 staff members. The Benchmark Retirement fund has grown to 9,000 members with assets of N$ 1.5 billion. Assuming an average family size of 5, RFS is touching the lives of close to 200,000 people in Namibia.

With these statistics we are fully cognisant of the responsibility this places on us to plough back into the communities that are paying for the services we provide.  Over the past year we ploughed back 0.8% of total revenue into the communities that support us, through directors' social responsibility projects and other sponsorships. This even significantly exceeds the allocation defined in our policy. Our staff is encouraged and supported financially to become members of and involved in industry bodies and in their communities. Sincerity requires personal involvement rather than throwing money at projects but not personally identifying with these.

The shareholders of the company know that we require a superior team to keep clients happy to make clients refer us to other businesses in Namibia and we are not shy in sharing the fruits of the hard work of our team with our team to recognise its contribution. In respect of the past financial year we will have made once off payments to non-shareholding staff in the form of incentives and bonuses, of more than 20% of the company's net income before tax, not to forget that we share another 33% of our net income with our government!


On behalf of the shareholders and our Directors, we wish all our readers and all our clients a peaceful festive season and a prosperous 2015! We look forward to continuing our resolve to deliver service beyond expectation to our clients and to maintain the wonderful relationship we have built up with you over the past number of years!

We wish all our readers a joyous and festive season and a prosperous 2015!

Christmas in the RFS Office and office closure


The Christmas mood has set in. Please note we will be closed on 24 December 2014 and will reopen on 5 January 2015.

Tilman Friedrich's Industry Forum

Benchtest Monthly 11.2014

In November the average prudential balanced portfolio returned 1.46% (Oct: 0.12%). Top performer is Investec (2.41%); while Allan Gray (0.11%) takes the bottom spot. For the 3 month period Investec takes top spot, outperforming the 'average' by roughly 1.2%. On the other end of the scale Allan Gray underperformed the 'average' by 2.0%.

The Geopolitics of the oil price

The topic of the day for the investor must be the sudden and sharp decline in the oil price.  The following graph was published in Efficient Select news brief of 4 December. This was the time when the oil price was still at US$ 71.49 per barrel. At the time of writing this piece, it has dropped to below US$ 60 per barrel. As difficult as we found it to comprehend the sharp increase since the beginning of this century to a peak of US$ 140 a barrel, it is to comprehend the steep decline in the oil price since the first quarter of this year.

We have seen the increase in the oil price pulling along commodities and the broader market as depicted in the lower graph reflecting the FTSE/JSE Alsi 40.

The broader market has maybe not been as volatile and has not had as sharp a peak and a trough before and after the financial crisis, as the oil price, the close correlation, however, is quite evident. On its way down, the broader market is also likely not to bottom out as low as the oil price, but where will the oil price bottom out?

As little as we were convinced then of the peak oil theory suggesting that declining resources and increasing consumption caused the increase, we are convinced that the sharp increase in US production through  fracking is the reason for the sudden decline in the oil price. US production is still minute relative to global production and it is produced at a cost making it in many instances already uneconomical at today's oil price.

Fracking, by the way is not such a revolutionary new method of extracting oil where it was never thought possible, that it could have caught all by surprise. A couple of years ago we already came across an article suggesting that Vietnam has become virtually self-sufficient, producing oil by means of Russian fracking technology.

Oil is a weapon used in the economic warfare of global hegemonies. What we see today, we believe, is the reversal of what happened with the oil price on its way up, as we opined upon in our newsletter of March 2008 . What will the consequences of the great unwinding of super profits in the production and distributions chain of oil be for the investor and how far will this unwinding go?

Read our full commentary in part 6 of the Benchtest 11.2014 newsletter, find out how these and other developments impact on our investment views and download Benchtest 11.2014, here...

Marthinuz Fabianus to represent NEF on SSC


Marthinuz Fabianus, Deputy Managing Director of Retirement Fund Solutions was appointed a member of the Social Security Commission for the period 1 January 2015 to 31 December 2017, following his nomination by the Namibia Employers Federation. We extend our sincere congratulations on this appointment! We wish Marthinuz all the best with the onerous responsibilities he will take upon himself and trust that he will serve with wisdom and foresight in the best interests of all stakeholders.

Meet the team that will lead RFS into the future

On the occasion of our 15 year anniversary function the company's management team was introduced to the public. In the next few newsletters we will introduce the team. In this issue, meet Louis Theron, Director Support Services.



Louis joined us on 1 March 2008. He is a Namibian who grew up on a farm in the south. He obtained a B Econ degree (in 1989) and a higher education diploma (in 1990) from UOFS. In 2003 he obtained an honours degree in business administration from the University of Stellenbosch. Prior to joining Louis was employed at Agribank since 1992 working his way up to the position of Manager Financial Services at the time of his departure. Closer to home he served as trustee of the Agribank Pension Fund for 11 years and represented Agribank as director on various boards. Louis' responsibilities encompass the staff -, company administration, company finances - and IT portfolios.

News from Namfisa

Statement of investment holdings - November update

The due date for submission of the reports for the 4 quarters of 2014 remains 28 February 2015. A number of funds have arranged with us to compile the consolidated reports for their fund based on the information provided by each of the fund's investment managers. We have requested to be provided with the reports from the managers for the first quarter of 2014 by 28 November 2014. Only one manager has provided its report and only in respect of its prudential balanced unit trust.

We are aware that the asset management industry have also approached Namfisa for extension on behalf of their pension fund clients. To our knowledge Namfisa has not responded to this approach by the asset management industry.

In terms of our time schedule, the first due date was thus already missed and we may not be able to submit the consolidated reports to the principal officers in time for their submitting their fund's reports to Namfisa by 28 February 2015. As the result we have suggested to clients to apply for extension to 30 April 2015.

Unlisted investments - November update

Clients who have not requested and been granted extension for complying with the requirement to invest a minimum of 1.75% in unlisted investments by 31 December 2014, are likely face to a penalty of a minimum of N$ 500 a day of non-compliance.

We have reminded clients repeatedly to apply for extension and trust that all our clients have done so.

Housing loans and the impact of recent changes to the Act

One of the changes brought about by the Pension Funds Amendment Act published on 10 October 2014 was to remove the previous maximum repayment period of 30 years and to introduce a maximum repayment period of the shorter of the member's employable years to normal retirement or the expiry of the ownership right in terms of the Communal Land Reform Act, where a loan was granted in respect of such property.

Loans already existing on 9 October 2014 will not be affected by this amendment but all loans granted as from 10 October need to be determined on the basis of the new maximum repayment period.

Voluntary termination of employer's participation in umbrella fund - circular 1 of 2014

Namfisa issued circular PI/PF/DIR/01/2014 with an effective date of 1 January 2015, directing principal officers to submit a prescribed report and prescribing the process that needs to be followed by an umbrella fund where a participating employer voluntarily withdraws from the umbrella fund.

Failure to pay contributions in time - circular 2 of 2014

Namfisa issued circular PI/PF/DIR/02/2014 with an effective date of 12 December 2014, directing principal officers of pension funds to report within 1 month any failure to pay contributions within 7 calendars days of the end of the period in respect of which the contributions were due. The registrar will refer any offence in this regard to the Prosecutor-General for prosecution. Circular 4 of 1994, dealing with the same subject was revoked.

It should be noted that failure to report non-, or late payment may expose a fund to a penalty of N$ 500 per day of non-compliance.

Draft Financial Services Adjudicator Bill 2014 released for comment

Namfisa just released the draft Financial Services Adjudicator Bill 2014 for comment. If you work through this Bill, (download below), and have any comments or suggestions, please submit these in the format as per Namfisa's memorandum(download below). Comments should be submitted by not later than 30 January 2015.

• Download the Financial Services Adjudicator Bill...
• Download the Namfisa Financial Services Adjudicator Bill memorandum...

News from the market

Namdeb reappoints Retirement Fund Solutions

Namdeb Provident Fund recently completed its regular review of service providers to the fund. We were exited to hear the news of our reappointment for a second term of 3 years as from 1 July 2015. We are proud to be associated with this client. We sincerely thank the board of trustees for the trust and confidence in our capabilities and look forward to serving the fund with the same level of dedication and commitment as in the past.

MMI appoints Retirement Fund Solutions

MMI Holdings Namibia Staff Provident Fund has recently gone through a tender process for appointing an administrator to the fund. We were excited to hear that our tender was successful. We are proud to be associated with this prominent Namibian insurer effective 1 July 2014. We would like to express our sincere gratitude to the board of trustees for the trust and confidence in our capabilities and look forward to serve the fund and its stakeholders to their total satisfaction.

Media snippets
(for stakeholders of the retirement funds industry)

Bull and bear report quarter 4 2014

The Bull & Bear report that is produced from a survey conducted by Sanlam's Glacier Research, collates the performance expectations of leading South African Asset Managers over the coming 12 months. Asset Managers are asked to comment on expected performance for various asset classes and sectors, currency levels, commodity prices and the performance of selected global markets. These viewpoints are subject to change in line with changes in economic and market conditions.

Download the article here...

Media snippets
(for investors and business)

The problem with Silicon Valley's new culture of amorality

In this article the author laments how the spirit of Silicon Valley has changed over the years, citing Google as a point in case. When Google listed, it went out of its way to prevent bankers and their insiders from profiting from the listing. Its "...passion towards social responsibility was front and centre...telling future shareholders that making money was not the prime goal...". Today we witness "...a secret conspiracy by Silicon Valley's most successful and richest companies, Apple, Google, Intel, Intuit, Adobe, against their own workers, to hold down their salaries and restrict their career moves; Zynga's admission of nasty revenue scams; Uber's uber-sleazy growth strategy; Twitter's demands for tax relief simply for locating its HQ in San Francisco's poorest neighborhood -- an economic burden for the city."

Read the article by Tom Foremski, former Financial Times journalist and publisher of Silicon Valley Watcher in LinkedIn of 23 November 2014, here...

How successful people stay calm

In this article the author explains that humans require a certain amount of stress to perform optimally but that excessive stress over extended periods actually achieves the opposite. He lists the following 10 methods applied by successful people to manage stress:

• They appreciate what they have - taking time to contemplate what you are grateful for;
• They avoid asking "what if?" - such statements throw fuel on the fire of stress and worry;
• They stay positive - positive stress helps stress intermittent by focussing your brain's attention onto something that is completely stress-free;
• They disconnect - taking regular time off the grid can help keep your stress under control;
• They limit their caffeine intake - drinking coffee triggers the release of adrenaline, which is the source of the 'fight-or-flight' response;
• They sleep - it increases you emotional intelligence and manages your stress levels;
• They squash negative self-talk - ruminating on negative thoughts raises their power;
• They reframe their perspective - before you take too much time dwelling on something, take a minute to put the situation in perspective;
• They breathe - when you're feeling stressed, take a couple of minutes to focus on your breathing;
• They use their support system - you need to recognise your weaknesses and ask for help when you need it.

Read the useful advice by Dr Travis Bradberry, author and cofounder of TalentSmart, on LinkedIn, here...

And finally...

"Derivatives are financial weapons of mass destruction."
~ Warren Buffet

Tilman Friedrich is a qualified chartered accountant and a Namibian Certified Financial Planner ® practitioner, specialising in the pensions field. Tilman is co-founder, shareholder and managing director of RFS, retired chairperson, now trustee, of the Benchmark Retirement Fund.