|In this newsletter:
Benchtest 06.2018, are we ready for the FIM Act, RF.S.5.20, RF.S.5.22 and RF.S.5.23 analysed and more...
Important notes and reminders
VAT registration and refunds – press releases
We believe Namibia is not geared and we still have serious concerns about a number of matters, including more prominently, the following:
Namibians generally seem to be in the habit of failing to maintain and repair their capital assets and rather build a new replacement asset at a high capital outlay and great cost to the economy. I am sure this frequent phenomenon has caught the eyes and attention of many alert observers.
One argument in support of this of cause can be that it will increase the velocity of money flow, which is at the core of economic growth. This argument however will not be valid if much of the capital outlay leaves the country. Witness all the construction activities that have gone on over the past number of years, and are still going on in Namibia, largely undertaken by foreign contractors who leave very little of their earnings in Namibia. So where the taxman has a hand in every transaction where money is passed between two Namibian taxpayers, the moment the money leaves Namibia this chain breaks and no further taxes will be collected on that money. Furthermore, building new and discarding the old that could have still represented a productive asset, necessarily entails wastage of resources and a cost to our economy. Such wasted costs only contribute to the uncompetitiveness of the Namibian economy.
The FIM Bill is a point in case. Namibia has a Pension Funds Act since 1956 (and other financial services laws) and it has been built by our courts over the past 60 years. Possibly because it was seen as Apartheid era legislation, the Pension Funds Act never really received much attention since Independence, as the result of which it was not really maintained and underwent very few repairs. We rather preferred to build a new law to replace the Pension Funds Act and a number of other financial services laws. With this new law, unlike an asset, we will discard all the established expertise and experience that was built over 60 years. It is not possible to quantify the economic value that will be thrown out the window, but it will be many, many millions, no question being raised about this wastage of very scarce resources. Also, as for many of our infrastructure projects that were undertaken by foreigners, this new law was largely the product of foreign experts. Their remuneration too, will have left Namibia breaking the tax collection chain at that point.
If Namibians were not technically capable of building this ‘aeroplane’, will we depend on foreigners to ‘fly, maintain and repair this aeroplane’ now and perhaps forever?
New regulations and standards: comment on RF.S.5.20, 5.22 and 5.23
In the second half of last year NAMFISA issued a number of new regulations and standards for comment. Although some comments were submitted these mostly did not address the substance of these but rather their form. Having considered these comments NAMFISA made some changes that we would consider superficial and not addressing the real concerns. Trustees are urged to pro-actively consider the possible implications of these regulations and standards and how to deal with these. Funds are encouraged to liaise with RFS where these may impact the administration of the fund.
The following regulations and standards were issued and covered in the process:
The above regulations were covered in the Benchtest 2018-02 newsletter issued in February.
In the Benchtest 2018-03 newsletter we addressed RF.S.5.11.
The rules of every fund and its code of conduct must provide for (s 2) -
No transfer of benefits and corresponding assets and liabilities may be made, if (S 2) –
If applicable, following reports must be appended to transfer agreement upon submission to NAMFISA (S 5) –
Copies of documents to be provided free of charge (S 2) -
Copies of documents to be provided for a reasonable fee (S 3) –
The following documents can be further adapted with the assistance of RFS.
News from RFS
Former managing director hands over the baton
Here are a few photos from our internal handover function:
Tilman Friedrich handing over a ceremonial axe, symbol of authority to Marthinuz Fabianus, the company's new MD.
The RFS family assembled for a goodbye and welcome back picture. (Tilman Friedrich remains Chairman of the Board.)
The new Board of Directors of RFS (fltr): Louis Theron, Marthinuz Fabianus, Rauha Hangalo, Günter Pfeifer, Sharika Skoppelitus, Tilman Friedrich, Kai Friedrich, Festus Hangula.
We are pleased to announce that Valerie Mudisie has joined our permanent staff establishment as from 1 August 2018. Valerie joined us in February 2018 from Alexander Forbes Financial Services where she last held the position of team leader. Valerie is a born Namibian from Okahandja. She is married and the mother of three kids (1 girl and 2 boys). She matriculated at Jan Möhr Secondary school in 2003. She started her career in 2004 with FNB as an admin clerk. After 5 years in the banking industry she joined Alexander Forbes as a Senior Fund Administrator. She was promoted to the position of team leader in 2014. Valerie gained valuable experience in our industry during the 8 years she worked for Alexander Forbes. She is a member of the Benchmark team serving a portfolio of participating employers as a Fund Administrator. Her 8 years’ fund administration experience no doubt stands her in good stead to promote our slogan ‘rock solid fund administration that lets you sleep in peace’ amongst her clients! We extend a hearty welcome to Valerie and look forward to her being a key ‘player’ for many years to come!
RFS and the Benchmark Retirement Fund welcome Namib Lead and Zinc
We are excited to advise that Namib Lead and Zinc just informed us it will be joining the Benchmark Retirement Fund as a participating employer. We sincerely appreciate this gesture of confidence and trust in RFS, as fund administrator, and the Benchmark Retirement Fund and extend a hearty welcome to the company and its employees to the fold of the Benchmark Retirement Fund. Our business model is not to dominate the market through a low-cost proposition. We focus on transparency, exceptional reporting and superior service. This should support and promote sound industrial relations and the employer’s employment philosophy and policy of attracting and retaining the best staff. If these are objectives important to your company and close to your heart, we should be your ideal partner in the provision of retirement benefits to your staff.
This appointment takes editor down memory lane to the 1970’s when he used to audit the books of Namib Lead and Zinc's predecessor mine!
News from NAMFISA
NAMFISA launches whistleblowing hotline
As reported in The Sun The Namibia Financial Institutions Supervisory Authority (Namfisa) board chairperson Gerson Katjimune has officially launched the Namfisa whistleblowing hotline.
RFS and the Benchmark Retirement Fund support this initiative whole-heartedly and encourage any stakeholder of the industry in general, but of RFS and the Benchmark Retirement Fund specifically, to make use of this new hotline to report any fraud, bribery, corruption and suspicious transaction without delay.
NAMFISA investments exposed
The Namibia Financial Institutions Supervisory Authority has investments of N$527.9 million outside the country, according to its 2017 fourth quarter statistics bulletin. The report released last week shows that this is as decrease from N$552.6 million recorded during the third quarter of 2017. However, the amount was lower than the N$928.1 million invested within the country. Meanwhile, the company’s total investments during the period under review stood at N$1.46 billion in the third quarter of 2017. According to the bulletin, cash outside Namibia stood at N$41.5 million, compared to equities and shares outside Namibia standing at N$155.2 million. – The Namibian.
(for stakeholders of the retirement funds industry)
Inside the mind of a balanced fund manager
“For quite a few years, analysts and market commentators have warned that investors should expect returns to be lower going forward. But the lack of investment returns over the past three years has been worse than many have anticipated and has caused alarm among local investors. Over the past three years the median return of a local multi-asset high equity fund – the typical unit trust investors use to save for retirement – was a mere 4.8%. Many of these funds have not kept up with inflation. During the period, the local equity market has largely moved sideways and after the rand weakened significantly at the end of 2015, the local currency has strengthened again. This meant that many funds could not fully benefit from the international stock rally...”
What is the general expectation of balanced fund managers of equities, as typically the largest asset class holding in a balanced portfolio, going forward?
Download this cross-section of investment manager views by Ingé Lamprecht in Moneyweb of 24 July 2018, here...
Safeguarding the elderly from financial abuse
“Dissect some of South Africa’s most controversial investment schemes and you will come across groups of pensioners who invested after they were lured with empty promises of great returns. In light of the country’s poor savings culture and socio-economic challenges, only about one in ten people are in a position to maintain their standard of living in retirement. Desperate to supplement a meager savings pot, it is not difficult to see why many retirees become victims of too-good-to-be-true money-making schemes. But financial abuse is not limited to having your money pilfered. It can also involve fraud or pressure to part with money or other assets, or having these misused by a loved one or acquaintance…”
As pensioners grow older, health is likely to fail and often they will no longer be in a position of evaluating the financial advice they receive from a financial adviser and to take a rational decision. So how do you protect the pensioners’ life savings?
Read the article by Ingé Lamprecht in the Moneyweb Investor of 24 July 2018, here...
Foreign equity transactions on the JSE
As equity investor one is competing with other equity investors for the best buys available. Often the buys everyone is piling into becomes expensive, being chased by high demand, with concomitant poor future growth prospects. Foreign investors represent a pool of investors on the JSE and their investment calls may assist you in deciding where to buy and where to sell.
SBG Securities produced an interesting analysis of what equities foreigners bought and sold on the JSE during June 2018. Download it here...
(for investors and business)
A huge storm may be looming for investors
Window-dressing - Why the market rallies at quarter end
“We are officially halfway through 2018 and it’s a good time to reflect and look at what’s happened so far this year. We compared the performance of the 100 largest shares on the JSE over different time periods and summarised the worst and best performers in the two tables below. Immediately we can note the 3.5% jump the Top40 Index experienced on 29 June, which accounted for all of the month’s 3.6% return. It was also the last trading day of the second quarter and the rampant one-day rally improved the picture substantially for those three months, returning 6.2% instead of 2.7%. The improvement was felt across the board with most shares posting a strong final day of the quarter. It may seem like an odd coincidence that the last day of the quarter sees this anomaly, but those in the asset management industry are well aware of this occurrence near quarter end. The phenomenon is called ’Window Dressing’ where fund managers change their positions and ’dress’ their funds to look more attractive at the end of a quarter (usually the period for reporting to clients). They may also try to increase the value of their funds in order to gain the maximum possible management fee (in cases where monthly or quarterly values are used to calculate the fee). The result is substantial buying support in the market which pushes up share prices…”
Read the full article by Joani van Wyk in Sharenet of 3 July 2018, here...
Where to invest - Comparing US and SA market valuations
If you are contemplating to invest in shares, should you invest in SA rather than the US or vise-versa? Analysing these markets on the basis of the CAPE (Cyclically Adjusted Price Earnings) Ratio tells an interesting story that may give you pointers where to look for opportunities. The next article (‘Mobius says there’s a 30% correction coming for US stocks’) dwells on the same topic and should also be referred to.
Download the full article by Ruan Koch of Laurium Capital in Moneymarketing of June 2018, here...
Mobius says there’s a 30% correction coming for US stocks
Mark Mobius, the 81-year-old investment guru, believes the U.S. stock market is set for a 30% correction that would essentially wipe out the gains of the last two years. The renowned fund manager…said “all the indicators” point to a large fall in the S&P 500… The market looks to me to be waiting for a trigger that will cause it to tumble. You can’t predict what that event might be — perhaps a natural disaster or war with North Korea…”
Read the full article in Marketwatch of 21 April 2018, here...
From Capricorn Asset Management Daily Brief of 25 July 2018.
Blackboard wisdom at a filling station
A filling station has become quite a landmark in Gauteng, South Africa, with its daily #PetrolPumpWisdom, which are uplifting quotes written on a chalkboard. Some motorists say they deliberately travel this road just to read the quote which brightens their day. Here's one: